COVID-19 relief: How small businesses should deal with banks
Charles Payne gives banking advice to small business owner John Schissler about receiving coronavirus funding from banks
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Fox Business anchor Charles Payne said on “Fox & Friends” on Wednesday that the “kinks” in the small business loan program aimed at helping the economy recover from the novel coronavirus must be fixed immediately.
The Paycheck Protection Program (PPP), which is part of the more than $2 trillion legislative package approved by Congress last month, is designed to get cash in the hands of struggling small businesses and incentivize them to keep staff on payroll, or re-hire workers who have already been laid off. Businesses with fewer than 500 employees are eligible for forgivable loans under the program.
“Hundreds and hundreds of thousands of applications are coming through, obviously there were a few hiccups initially,” Payne said on Wednesday.
“We’ve never as a nation done this before,” he added.
As part of the program, companies may borrow up to 2.5 times their payroll, or up to $10 million, which can be used for payroll and other expenses, like insurance premiums, mortgages, rent or utilities through June 30. The loans, which are guaranteed by the federal government, will be fully forgiven if 75 percent of the money goes toward keeping workers employed, according to the Small Business Administration (SBA).
“Small businesses are saying it's not enough money. It only goes out eight weeks. It’s not enough per employee,” Payne said on Wednesday, adding that the math “needs to be tweaked.”
“I think they’re getting it together. They’re bringing on more [money]. They’ve changed the program, but there are problems,” Payne said, pointing out that the average small business has about 24 days of cash on hand.
“We’re well into that,” he continued, as he added that small business are “clinging by a thread.”
THE CORONAVIRUS OUTBREAK STATE BY STATE
The $2.2 trillion coronavirus relief package, the Coronavirus Aid, Relief, and Economic Security (CARES) Act, also includes checks for most Americans and boosts unemployment aid.
Congress has expanded unemployment benefits by $600 per week above their current state baselines, which will provide welcome relief for laid-off workers.
Last week, the Labor Department announced that 6.6 million Americans filed for unemployment benefits the prior week, adding to the more than 3.3 million jobless claims filed the week before that, which brings the total for the latter part of March to 10 million -- about 8 percent of the private sector workforce.
“The unemployment part of this is problematic and a lot of Republicans said this would happen when the CARES act was pushed through,” Payne pointed out on Wednesday, noting that “you can make a lot more money” by collecting unemployment.
South Carolina Sen. Lindsey Graham was one Republican who had warned about what he called a loophole regarding unemployment benefits in the aid package.
Payne said that business owners have been telling him that some of their employees are choosing to collect unemployment versus staying on the payroll.
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“The administration really needs to understand that there are certain kinks here that must be worked out immediately. The good news is I think that they will work them out,” Payne said.
Fox Business’ Evie Fordham, Lucas Manfredi and Alfredo Ortiz contributed to this report.
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