OK, I’ve read the small business loan sections of the CARES Act (GOP senate bill) twice. It’s more or less everything I want *except* it needs to be 3 times bigger or they’ll run out of money fast. If adequately funded, this bill could avert economic catastrophe. Read more... 1/7
The bill allocates $350 billion for the program, which has steadily increased with drafting. @MichaelRStrain estimates that 80% of eligible firms’ revenues for 3 months amounts to $1.2tn. That’s not quite equivalent, but it gives you some sense of the required scale. T not B. 2/7
The program would cover the period February 15-June 30.
Applies to firms with fewer than 500 employees (covering half of all American workers).
Loans apply also to non-profit and veterans organizations, and sole proprieters, independent contractors, and self-employed.
3/7
Applies to firms with fewer than 500 employees (covering half of all American workers).
Loans apply also to non-profit and veterans organizations, and sole proprieters, independent contractors, and self-employed.
3/7
Maximum loan amount is 2.5 times average monthly prior-year payroll capped at $10m. There’s a mechanism to deal with new firms.
Loans are administered by the SBA and provided through lenders just like current SBA economic disaster injury loans.
4/7
Loans are administered by the SBA and provided through lenders just like current SBA economic disaster injury loans.
4/7
The portion of the loan used for payroll, interest, rent and utilities will be forgiven.
The forgiven portion will be reduced proportionately for any reduction in FTE employment at the firm and any salary reductions that exceed 25%, both relative to the prior year.
5/7
The forgiven portion will be reduced proportionately for any reduction in FTE employment at the firm and any salary reductions that exceed 25%, both relative to the prior year.
5/7
So it has lots of nice features. It’s possible it could cover more than payroll, which is critical for firms with high fixed costs. And it’s tied to maintaining FTE. But the funding needs to increase by around 2.5 times. Businesses need to be confident there’ll be money left. 6/7
It replaces payroll rather than revenue, but is quite close to @stanveuger’s and my plan. IMO, it is the most critical plank in protecting workers and businesses—and thus the broader economy—from a long and deep recession. I urge you to support it, with additional funding. 7/7
