PPP Was Important but Missed the Mark on Payroll Requirements
by John Arensmeyer, Small Business Majority Founder & CEO
On February 1, 2022, The New York Times reporter, Stacy Cowley, wrote an article, “Little of the Paycheck Protection Program’s $800 Billion Protected Paychecks.” The article analyzed new research that found that only about a quarter of the Paycheck Protection Program’s (PPP)funding went to jobs that would have been lost. As the pandemic dragged on, the government began to loosen rules for how businesses could use the money. The research found that PPP money ended up subsidizing business owners more than their workers.
This article amplifies some problems in the unprecedented rapid distribution of forgivable PPP loans during the height of the COVID-19 pandemic. As my organization argued from the start, too many businesses with established banking relationships went to the front of the line leaving under-banked, under-resourced businesses, particularly those owned by people of color, to fight for the remains.
That said, the article’s focus on the percentage of money going to short-term payrolls obscures the fact many businesses needed to spend the money on other expenses such as rent, insurance, and debt servicing to stay in business. Indeed, we heard from under-resourced businesses that the program’s strict payroll requirements hamstrung them.
When those requirements were loosened, the PPP money became even more of a lifeline. Under-resourced small businesses that struggled to benefit from the program still need additional support.
As coronavirus variants and supply chain disruptions continue to create setbacks for vulnerable businesses, Congress must look at solutions like additional money for the Restaurant Revitalization Fund.
