There's an easier way to get another round of PPP accomplished

There's an easier way to get another round of PPP accomplished
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Democrats and Republicans agree that there should be more stimulus funding. But they don't agree on just how much. That's why the Republicans’ scaled down stimulus bill failed to pass the Senate last week. And it's why the Democrats’ Heroes Act remains stuck in the House.

It’s easy to understand both sides.

On the one hand, trillions of dollars have already been spent on aid, yet the economy is starting to recover. Deficits are skyrocketing and many states are still trying to figure out how to spend even the last round of stimulus. Federal unemployment benefits were discouraging some from returning to work. But then many people still need help. Parts of the country remain shuttered. Another COVID wave could happen. Those states and cities that have been harder hit are desperate for more cash.  

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Most importantly, many small businesses are facing extinction.

Just this week, the National Restaurant Association said that, thanks to the pandemic, 100,000 restaurants have closed in the past six months and that 40 percent of restaurant operators believe it's unlikely their businesses will be afloat six months from now without additional relief packages from the government. A study published by the National Bureau of Economic Research says that over two million businesses have shut their doors since the beginning of the pandemic. Another researcher says that more than four million businesses could be lost this year, according to a Wall Street Journal report.  And the most recent numbers taken from a weekly survey of more than 800,000 small businesses provided by the U.S. Census Bureau are not encouraging: Only 20 percent of small businesses think it will take less than six months to recover, which is down from 56 percent in April. And only 28 percent of small businesses have enough cash to see them through the next month, compared to 41 percent at the beginning of the pandemic.

We also know which industries have been hit the hardest: restaurants, retailers, fitness, travel. It's no secret that – politics aside – those businesses in states that had the most widespread shutdowns have suffered the most. None of this is news. Congress knows it. Everyone knows that small businesses need help. Showing support for the country's 30 million small business owners is a safe, bipartisan, political move — and a smart one in this election year. Did I mention that it’s an election year?

So, what should be done? The answer is not so difficult. The best way to solve a large problem is to break it down into smaller parts and then attack those individually. It’s pretty clear that another large, comprehensive stimulus bill isn't going to happen. So, what should happen is that the bill gets split into different parts which can each be addressed and voted on separately.  The first priority should be the Paycheck Protection Program.

The Senate's failed stimulus bill already included $257 billion more in additional funding for the forgivable Paycheck Protection Program but this time with restrictions: Only businesses that have shown to have significantly suffered (a loss of 50 percent of revenues from the previous year) were eligible. It also expanded the types of costs that would qualify for forgiveness. Most importantly, it offered automatic forgiveness for companies who borrowed less than $150,000 and a much easier process to get loans under $2,000,000 forgiven.

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Sure, you can tweak the details a little. Make the definition of “suffering” a little more palpable. Lower the loan amounts eligible for automatic forgiveness. Provide even more stringent rules to protect against fraud. And yes, it would add billions more to an already enormous deficit. But a standalone bill that focuses just on small businesses would be much more palatable for both the Senate and House to pass, rather than the giant, unwieldy stimulus packages previously proposed. Once passed, Congress can then tackle other stimulus-related issues.

I’m sure congressional leaders will say I’m being naïve, or that it’s not so easy. Or that the effort spent on this smaller bill would take away from other priorities. Maybe that’s true.

But here’s what will happen if this passes. Restaurants, retailers and others who have been hardest hit get a lifeline. More employees can be sustained or brought back to work. Fewer bankruptcies will occur. Cities will face fewer retail shutdowns, which means less crime, less blight and potentially a quicker tax base recovery. Oh, and Congress gets an easy election year win that will please 30 million voters, not to mention their families, employees and communities.

Did I mention it's an election year?

Gene Marks is founder of The Marks Group, a small-business consulting firm. He frequently appears on CNBC, Fox Business and MSNBC.