August 21, 2020

Sen. Cardin: Congress must prioritize small businesses in next Covid-19 relief bill


By:  Carley Milligan

Source: Baltimore Business Journal

U.S. Sen. Ben Cardin said Friday that the best thing the federal government can to do help small businesses get back on their feet is to "get this virus under control."

With the country in its fifth month of the pandemic, and cases and deaths continuing to rise, that goal still feels a long way off. In the interim, Cardin said he and others in Congress are focused on passing the next round of economic and financial aid for state and local governments, educational institutions, nonprofits, businesses and more.

In particular, the senior senator for Maryland said the federal government needs to "pay special attention" to small businesses in its next stimulus deal. Small businesses are "the growth engine of America," he said, leading the way in job creation and innovation, but are not as resilient as big companies when dealing with economic downturns.

Cardin spoke about a potential timeline for the next round of aid, what he'd like to see included and what he learned from the initial $2 trillion Coronavirus Aid, Relief, and Economic Security Act (CARES) Act, during a virtual town hall event hosted by Johns Hopkins on Friday. Viewers tuned in to ask Cardin specific questions about the upcoming stimulus. A sampling is provided below.

What's the timeline for the next round of economic aid?
The Senate will return to Washington, D.C. Sept. 8 to begin the next round of talks for about four to five weeks before taking a recess ahead of the November election.

There's a lot on the table to deal with, from Covid-19 economic aid and testing, to the current challenges the U.S. Postal Service is facing and budget appropriations for the next fiscal year, which begins October 1.

Cardin expects small business owners will see new aid legislation passed sometime between the first week of September and the first week of October.

Which small business assistance programs have expired and which will be renewed?
Currently there are no tools available under the CARES Act for business owners to access, Cardin said, noting "we have a lot of work to do."

The Paycheck Protection Program (PPP) expired and stopped accepting new applications on Aug. 8, although $133 billion is still available in the fund. New applications will not be accepted until Congress acts, something Cardin said should have been done before now.

The Economic Injury Disaster Loans (EIDL) program is also on hold. Although it is a permanent program, new funds need to be made available to replenish it. Cardin hopes that in this second round, Congress will be able to give the program more capacity to provide loans.

What did you learn after passing the CARES Act, and what do you hope will be different this time?
The whole idea of PPP was to get money out quickly to small businesses to help keep them afloat, Cardin said. It was also passed with the thought that the pandemic would have passed and the economy would be returning to a more normal state by summer — but "we were wrong about that," he said.

Congress subsequently extended PPP, expanded eligibility and enabled new lenders to meet ongoing needs. However, Cardin noted, as data from the program became available, they discovered minority-owned businesses, the smallest small businesses and businesses located in underserved or underbanked communities were still not getting the kind of help they needed.

Even with the steps taken to correct the program's imbalances, Cardin said Congress has to "do a better job."

This time around, Cardin said he wants to bring a more targeted approach to help the smallest businesses with the biggest losses, which may also mean taking more time to get the money out the right way.

He mentioned a few ways to encourage that kind of focused lending, including strengthening and providing more resources to Community Development Financial Institutions (CDFIs), mission-driven lenders, Minority Depository Institutions and federal Minority Business Development Centers. There was already a requirement for the Small Business Administration and U.S. Treasury to do this in the original CARES Act, Cardin said, but it was not followed.

"I was not pleased with how the administration implemented it," he said, also noting frustrations with delays in providing data on the program and where the loans actually went.

Will there be a forgiveness portion for loans obtained through the EIDL program?
"If I had my way, we would have loan forgiveness under EIDL," Cardin said.

Cardin said he especially likes the EIDL program because it provides working capital and long-term financing with low interest rates and no required repayment during the pandemic. And, because it is run by the SBA, it also provides direct relief for small businesses without requiring them to go through a commercial bank.

However, Sen. Marco Rubio, chairman of the Senate Committee on Small Business and Entrepreneurship, has an idea for a new program that would be operated through banks in underserved communities, Cardin said.

"Many businesses in underbanked communities don't have relationships with banks, or bank are not interested in small loans, whereas with the SBA you can get that kind of relief," Cardin said.

"But it's not just up to me," he added. "It's a bipartisan effort, and I want to keep it that way."