Small Businesses Find Gov't Help Is Never Easy

The Paycheck Protection Program launched but wasn't ready for prime time.

Nate Jackson · Apr. 7, 2020

Congress authorized the $350 billion Paycheck Protection Program (PPP) as part of its massive $2.2 trillion CARES Act, meant as an economic lifeline for millions of Americans. As with all things the government touches, however, there’s now a bureaucratic train wreck.

The Small Business Administration (SBA) is backing the PPP, which, in short, works this way: Beginning last Friday, small businesses could apply at participating local banks for loans to cover qualifying payroll, health-insurance premiums, and a handful of other approved expenses over an eight-week period. Various and sundry documentation is required to prove both the need up front and then the use of the money after the fact. If certain conditions are met, the loan will be forgiven. If not, it’s a two-year loan at 1% interest. The obvious intent is to save millions of jobs by keeping businesses solvent.

Easy peasy, right?

Not so much. The attached strings are never actually one-size-fits-all, for one thing. Moreover, the system wasn’t ready for the demand, in part because the PPP doesn’t fit with previous loan-compliance protocols. The Treasury Department didn’t issue guidelines until Thursday night before the program opened on Friday morning, and the SBA’s online system crashed under the immediate flood of applications. A normal year means about $30 billion in SBA loans; it’s processing 10 times as much in a matter of weeks, if not mere days.

The SBA acknowledged in an email to lenders Monday, “We know that your efforts have been frustrated with system issues, policy questions and slower than usual responses.” That’s putting it mildly.

Fixes are underway, but time is of the essence. “You’re talking about something here that is $350 billion, has no precedence, has never been done before,” said Sen. Marco Rubio (R-FL). “You’ve got to create this massive program and its rules in six days and launch it. Anytime you do it that way, of course you’re going to have some issues, but we have no choice. This is an emergency situation. And when you do things in an emergency situation, they’re going to be far less than perfect.”

Even as the relevant folks work out the horrible kinks in the system, Congress and the president are already talking about another round of similar federal aid, including more money for the PPP because there’s no way $350 billion will be sufficient through the end of June — in no small measure because a few big businesses can now apply.

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