More—and more targeted—aid is necessary for businesses hard-hit by shutdowns and struggling to reopen, Treasury Secretary Steven Mnuchin said before the Senate Small Business & Entrepreneurship Committee on Wednesday.
As lawmakers examine what further needs to be done to help businesses through the crisis, the secretary said, “We’re open-minded, but we absolutely believe small businesses, and, by the way, many big businesses in certain industries, are absolutely going to need more help,” Mnuchin said at the first oversight hearing alongside Small Business Administration administrator Jovita Carranza on the progress of the implementation of the $670 billion Paycheck Protection Program and other relief programs on Wednesday.
The secretary said the administration wants to work on providing further help, whether through the PPP, tax credits, or other options. He added that “another bipartisan legislation to put more money into the economy” was likely going to be needed, targeting the restaurant, hotel, and travel industries, which are struggling to reopen.
As a central piece of the small-business emergency aid, the Paycheck Protection Program thus far has doled out over $511 billion in funds, as nearly 4.5 million small businesses have received loans, per the latest data from the SBA. Mnuchin also said Wednesday that more direct stimulus and a reexamination of enhanced unemployment benefits may also be necessary.
Although the program’s rollout has been mired in controversy and confusion, senators on both sides of the aisle agreed the latest unemployment report from May, which saw the unemployment rate drop to 13.3% with some 2.5 million jobs regained, was the result, in part, to jobs saved through the PPP, and Mnuchin said he was “pleasantly surprised” at the numbers. Sen. Marco Rubio, the committee’s chair, estimated during the hearing that at the current loan numbers, the PPP saved roughly 50 million jobs, and declared, “Without PPP, we would have faced the extinction of small business as we know it.”
Still, Sen. Jeanne Shaheen said 13% unemployment was “unacceptable” and that while extra funds remain untapped from the PPP, “this is an opportunity that we should take advantage of for those businesses that need continued help.”
More targeted aid
Lawmakers mulled additional aid and stimulus for businesses, as senators including Ben Cardin, Chris Coons, and Shaheen are planning to propose a bill enabling businesses that already received and spent a PPP loan to get another one, meant for “genuinely” small businesses that had taken a “significant” hit to their revenue owing to the crisis. Mnuchin backed the idea of more funding for businesses in general, but noted it “needs to be much more targeted, particularly to the industries and small businesses that are having the most difficulty reopening,” he said, restaurants and hospitality businesses chief among them.
Senators also want to direct more funds to minority-owned businesses and provide easier access to the funds for small-business owners with prior felony convictions.
Senators raised concerns at the hearing about the program’s reach among minority-owned businesses, as Sen. Ben Cardin, the committee’s ranking member, said in an opening statement, “While the PPP’s success is a laudable accomplishment, there have been challenges in the program that have come into sharper focus given the massive protests our nation has witnessed over the past two weeks…For black small-business owners and other underserved entrepreneurs, the wealth gap is exacerbated by disparities in small-business lending.” He urged the SBA and Treasury to provide guidance to lenders to “prioritize underserved markets,” as recent reports show that black employees were hurt far more by unemployment.
Lack of transparency
Senators have continually asked for more transparency and information from the SBA, including the SBA recipients for the PPP and demographic breakdowns of who received loans. Cardin said during the hearing that the Government Accountability Office (GAO) has also had issues getting information about the small-business programs from the administration, but Mnuchin indicated the administration was working with the office to get the necessary information. Although the senators and Mnuchin agreed that more aid would likely be necessary, Cardin asked, “How can we know which businesses still need help if we do not know which businesses have received help?”
Yet despite continual requests for more information, Mnuchin said during testimony that names and amounts of recipients would not be provided as they are “proprietary” and in some cases “confidential.”
Meanwhile, the program recently got a complete revamp—Congress passed a bill last week that extends the deadline to use funds from eight to 24 weeks and requires businesses to use 60% of funds on payroll (down from 75%). With those new rules in place, Mnuchin indicated more businesses who had been on the “sidelines” would likely now take the loans.
As of SBA’s latest report, there are still over $130 billion of funds yet to be allocated. But with the June 30 deadline to apply approaching, Mnuchin indicated he would be working with Congress to use the funds in other ways.
More must-read finance coverage from Fortune:
- 41 states are seeing a drop in unemployment. How does your state stack up?
- Insurance redlining is real—and it will hurt neighborhoods hit by looting
- Why are stock prices going up when the economy is in ruins? Here’s some helpful context
- Morgan Stanley says these four factors could clip the wings on the S&P 500 rally
- GoFundMe donations for elderly Buffalo man injured by police soar after baseless Trump tweet
- WATCH: Why banks were ready for the financial impact of the coronavirus
