by Pat Rooney
Well, we are off on a new Rotary year with a new President and recently new Rotary News Editor who reminds us to keep our reflection articles to 500 words and away from favorite charities and politics. Given today’s recent attempts to politicize everything, that may be a challenge, but here goes.
The Paycheck Protection Program, otherwise know as the PPP, was created by Congress in the Cares Act to protect employees potentially laid off in the COVID-19 shutdown phase. Loosely written by Congress to be as inclusive as possible, the program, by most accounts, has been a success allowing employers to keep people on the job for up to 10 weeks. Since it was loosely written, PPP funds did go to otherwise healthy companies, charities and some private schools that were probably not as damaged by the shutdown as others in food, hospitality and entertainment. But these businesses had payrolls, as well, and the idea was to keep the workers employed. Also, as a banker friend of mine said at the height of the shutdown, “it would be hard, at this point, to imagine any business not affected by the shutdown of the economy.”
The specifics of the Small Business Administration (SBA) program moved around some with 65% mandated for payroll and the rest for certain other expenses. The interest rate is set at 1.0% and repayment can be over two years. The biggest issue looming is the possible forgiveness feature. No one is exactly sure how the forgiveness feature is going to work, but one indication is that the application form to get the loan was two pages and the form for forgiveness is nine pages and counting. Further, the SBA and Treasury departments are on record that all loans over two million will be audited for accuracy and compliance. Should there be missteps, the loan forgiveness will be denied and the loan repaid.
No government program in history has gone off without a hitch and this one will be no exception. There have been and will be the requisite “horror stories” about companies taking advantage. As a testimonial from the front lines, the program did its job, for the most part. Those “non-essential” businesses in food and drink, entertainment, hospitality and the like fared the worst, suffered the most and had the strongest claim on the funds.
Much remains to happen with the PPP and the final chapters have not been written. The shutdown was a difficult time for all of us. There is a saying I keep in mind that says “fear weakens judgement the most.” There was plenty of fear out there and plenty of weak judgement. Congress was pressured to act quickly, and did so. It was an unprecedented time, one without much of a road map and one we will talk about for a long time. Thankfully, the PPP is one of the success stories, “so far.” Stay tuned.