Joe Biden Calls on Trump Administration to Ensure that Relief Funds Get to Deserving Small Businesses

As Congress reaches a new deal on economic relief measures, including more funds for the Paycheck Protection Program (PPP) for small businesses, I am grateful to Democratic leaders for securing more funds for hospitals and testing, and more resources for smaller lenders and community-based financial institutions, as well as the depleted Emergency Injury Disaster Loan and Emergency Economic Injury Grant programs. These hard-fought improvements will help deserving small businesses who were shut out in the first round of funding.

Let’s be clear: It wasn’t just a shortage of funds in the PPP that kept so many small business owners — men and women who have put their work lives, savings, heart, and soul into their businesses — from getting loans. Many had the door shut in their face — businesses like auto mechanics and main street shop owners and restaurant and bar proprietors. Many were pushed to the back of the line by chain restaurants, biotechnology companies, well-off consultants, investors, accountants, and lawyers who shouldn’t have even been in line in the first place.

This was intended to be an economic crisis program to prevent the shuttering of our truly small businesses that were the most deserving — not the best connected. It was intended to be about how many jobs a small business owner could save, not how much they paid a high-priced accountant.

Before the first application had been submitted for the first penny, I was demanding that Trump use his full authority to make sure every bank understood their mandate to help every small business who came through their doors or websites or phone lines.

For weeks, I have been warning Trump that the funds “should be available to every single eligible small business, regardless of how small they are, where they are located, or how well-connected their owner is.”

Trump didn’t listen. Consider this from early estimates:

• More than a quarter of the $350 billion went to less than 2 percent of the firms that received funds from the PPP, “including a number of publicly traded companies with thousands of employees and hundreds of millions of dollars in annual sales.” Coal mining company Hallador Energy got a $10 million PPP loan. The operators of Ruth’s Chris steakhouses got a $20 million loan.
• Loans for $1 million or more represented more than 45 percent of the total amount loaned, while accounting for less than five percent of the loans.

Trump and his team let banks slam doors in the face of small business owners trying to save their workers and their businesses.

Under the way the Trump team administered the program, it was A-OK for a major bank like Bank of America to tell family-owned businesses that if they had relied on loved ones and not a big bank for loans in the past, their application was denied, no questions asked.

Think about this: the three biggest lenders earned hundreds of millions of dollars in fees from the government for the privilege of excluding mom-and-pop businesses in favor of their larger existing clients. That was not an accident — the Trump team knew and let it happen.

The Trump Administration also allowed big banks to shut the door in the face of the owner of a family restaurant, while letting major restaurant corporations in this country get their franchisees first in line for millions and millions of dollars. Again, this was not by mistake. It was permitted. I’m glad that Shake Shack is giving the money back, but a lot of the others aren’t. And we shouldn’t have to count on the conscience of the CEO — the Trump Administration should simply be saying no.

African-American small business owners — who currently rely far more on friends and family than big banks, have been shut-out of the PPP in numbers that are disgraceful. Again, by Trump’s design.

And, while the Trump Administration adopted an approach to disadvantage the truly small businesses facing devastation, they also adopted an approach to help their high-priced friends. This fund is running out because they allowed boutique consulting, investment, legal and accounting firms — who were doing just fine — to receive millions they did not deserve.

Let’s not pretend the program is working for everyone. It’s not. In addition to adding resources, let’s fix it. Let’s get the funds to the folks who deserve it. We may still be in the early innings of the policy response, but we need to help our workers and small businesses, so we need to get this right before any new funds go out.

Joe Biden’s Proposals to Support Deserving Small Businesses

Here’s what Joe Biden thinks we should do now that Congress has secured more funding:

1. Establish a True Small Business Fund: Congressional Democrats secured a set-aside of $60 billion in funds for smaller lenders and community-based financial institutions, which are frequently best positioned to get resources into the hands of deserving small businesses in vulnerable communities. Joe Biden is calling on the Trump Administration to go even further as it implements the PPP. The Trump Administration should reserve fully half of all the new PPP funds for small businesses with 50 employees or less, so the bigger and more sophisticated aren’t able to win in a first-come, first-served race. We should make sure we serve the mom-and-pop shops — beauty salons, barbershops, diners, local auto body shops. Back on April 3, Joe Biden asked the Trump Administration to “produce a weekly dashboard to show which small businesses are accessing loans — to make sure that the program isn’t leaving out communities, minority- and women-owned businesses, or the smallest businesses.” They have not done so. It is unacceptable to have a small-business program that is leaving minority business owners out in the cold, or that firms with fewer than 20 employees received only about 20% of the money — even though they make up about one third of payroll. Small non-profits — including churches, mosques, and synagogues — should also be eligible for this fund. The Trump Administration can do this if it makes it a priority. The country will be watching.

2. No Unjust Enrichment: Keep Well-Off Business Owners from Using Any Program to Unjustly Enrich Themselves: Our emergency programs should be designed to keep small business owners and their workers whole during the crisis — not to make well-off business owners better off than they would be with no crisis. Unfortunately, there is a very real risk of high-paid business owners suffering little revenue harm seeking to have loans forgiven that are for more than the losses they have suffered. This is just wrong. Joe Biden would expedite loans with less unnecessary paperwork to hard-hit businesses, and never punish firms or banks for good-faith mistakes. But Biden would also make clear that no business owner should be receiving more than their lost revenue — and that there should be heightened scrutiny of certain types of small businesses — consulting, accounting, legal, tax advice, hedge funds — and where owners and executives are making above $500,000. He is calling on the Trump Administration to embrace this approach in implementing the next round of funding.

3. Make Sure That the Program’s Terms Actually Help Small Businesses. Joe Biden would also support further rule changes to the PPP that would ensure deserving small businesses get all the help they need for as long as they need, including:

• Providing a guarantee that every qualifying small business will get relief, rather than capping the fund in a way that forces small firms to compete against one another.
• Authorizing more generous loans that allow for small businesses in need to both keep workers on payroll and cover fixed costs for the duration of the crisis. It’s no use paying for payroll if a small business can’t keep the lights on.
• Extending the eight-week limitation so that payroll forgiveness continues for the duration of the crisis (in early April, Biden called upon the administration to “immediately re-engage Congress to allow for small business loans that can keep people on the payroll for far longer than eight weeks”), and there should be flexibility to allow businesses to decide when the covered period begins.
• Establishing look-back audit mechanisms to police against abuse based on a review of net business income.