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Millions of Americans are staring into the abyss. They are scared that they or their family will fall victim to a deadly global pandemic and paralyzed at the prospect of businesses closing, paychecks vanishing, and personal savings evaporating. They need cash and they need it fast.
We cannot solve the economic crisis until we solve the public health crisis caused by the coronavirus, but we can take steps to ease the financial pain for our nation’s employers and their employees. And that is what Congress did last week.
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By now, everyone knows someone who has lost their job or had hours reduced. Businesses thriving just two or three weeks ago are now facing bankruptcy.
In my own home state of Florida, Clean the World started in a single-car garage in Orlando and grew to 90 employees and $15 million a year in revenue in just 11 years. Right now, though, it has 2.8 million bars of soap sitting in storage and risks mass lay-offs — even closure.
In this March 25, 2020, file photo, a closed sign hangs in the window of a shop in Portsmouth, N.H. (AP Photo/Charles Krupa, File)
For this company and the rest of the country’s more than 30 million small businesses, as well as the 60 million Americans they employ, this is a life-or-death situation. They need a lifeline.
Fortunately, the bill Congress passed Friday provides exactly that relief, in the form of something called the Paycheck Protection Program.
This $350 billion program — a bipartisan effort developed with Senators Susan Collins, R-Me., Lamar Alexander, R-Tenn., Ben Cardin, D-Md. and Jeanne Shaheen, D-N.H., — will immediately get cash in the hands of small and midsize businesses to keep Americans tied to their jobs.
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How will it work?
For small businesses and their lenders, it would essentially mirror the Small Business Administration’s (SBA) existing 7(a) loan program with more relaxed underwriting standards, a full federal guarantee and broader allowable uses.
Closed stores are shown at a central plaza and shopping district amid a public health order that has closed down most retail stores and suspended dine-in restaurant service in Santa Fe, N.M., March 27. (AP Photo/Morgan Lee)
Most importantly, so long as the business uses the loan for payroll costs like salaries and cash tips, as well as debt obligations like mortgage, rent, utilities, and insurance premiums, it would be forgiven in full — in other words, this is guaranteed cash to keep workers employed, leases paid and businesses open with no strings attached.
This program proposal wouldn’t comprise a new government interaction; instead, we’re relying on our existing network of preferred lenders under this SBA program, which comprises over 1,000 lenders, including 800 banks — many of which are community banks — and directs the Treasury Department and SBA to fast track even more into the program.
As we fight this public health crisis, the most important thing that we can do for our nation’s small businesses and their employees is to provide some certainty — certainty to businesses that they can keep their employees, certainty to employees that they can remain on the payroll and certainty that the connection between employer and employee will remain intact after this crisis passes.
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Of course, the Paycheck Protection Program won’t solve every problem. Some businesses are already being forced into lay-offs, causing tremendous hardship and insecurity for those affected.
For this reason, the grants would be retroactive to February 15, 2020, to help bring workers who have already been laid off back onto payrolls. Other provisions in the bill provide assistance for those who are not able to return.
Our nation stands amidst an extraordinary, world-altering moment, which is why we must do everything we can to guarantee the security of a job to return to for as many Americans as possible, as well as help avoid the start-up costs and impediments businesses face while hiring and training new employees.
Preserving our nation’s economic engine, as well as the vitality of millions of hard-working Americans and their families is critical for our economic recovery.
Republican Marco Rubio represents Florida in the United States Senate. He serves as Chairman of the Senate Committee on Small Business and Entrepreneurship.