Editorial: New U.S. Emergency Loans Program Should Help Support Real Small Businesses, Not Big Chains
President Donald Trump on Friday sign a fourth recession stimulus bill that included an additional $ 310 billion in Paycheck Protection Program (P3) loans for small business owners, in addition to $ 349 billion in loans a month. The bipartisan resolve displayed by Congress and the Trump administration to help small businesses weather the massive recession caused by the coronavirus pandemic and the nation’s shutdowns is laudable and something all too rare in the days leading up to the crisis. But good intentions are not enough.
What is needed is well-crafted legislation that ensures that businesses most at risk of never reopening get help. The original $ 349 billion in small business loans was gone within two weeks, and since then it has emerged that many well-capitalized companies were the main beneficiaries.
Ruth’s parent company Chris Steak House, which has more than 100 luxury restaurants in North America, has secured $ 20 million in loans. Shake Shack, which has nearly 300 high-end fast food restaurants primarily in the United States, has $ 10 million. After facing heavy criticism, the two announced this week that they would. give money back. But that doesn’t seem to happen with the 15 companies with a market value of $ 100 million or more, especially energy and hospitality companies that have obtained federal loans.
Treasury Secretary Steven Mnuchin agrees this shouldn’t happen. He told the Fox Business Network on Wednesday that the federal loan application required companies to certify that they needed the money to stay in business. “I think a lot of these big companies, it’s questionable if they can do this certification,” said the Wall Street veteran. He even raised the possibility that such companies could face investigations and sanctions.
But the companies that have repaid loans have mostly said they believe they are following vague guidelines in the law approved on March 27. “The PPP came without a user manual, and it was extremely confusing,” is how Shake Shack founder and CEO said in a statement. sharing on Linkedin.
It’s hard not to pit all of this against the Troubled Asset Relief Program (TARP) – the law enacted in 2008 that allowed the Treasury Department to invest hundreds of billions of dollars in banks, automakers and others. businesses threatened with disaster during the Great Recession. Six years later, at the end of the program, the government announced that it had in fact makes money on its investments. Officials who oversaw TARP under Presidents George W. Bush and Barack Obama should be closely consulted on current economic preservation efforts. An inequitable and “hugely confusing” small business loan program will hurt Americans.