The proposal would also appropriate $299.4 billion for Small Business Administration loans to companies with fewer than 500 employees. The loans would be capped at the price of covering some of the business’s monthly costs — payroll, debt payments, mortgage and rent — for up to four months, to a maximum of $10 million.
To the extent the companies use the loans to cover only payroll, the debt would be forgiven, but firms can also use them to cover other regular operating expenses and then pay them back.
While the forgivable loans would help many small businesses stay open during the coronavirus-driven slowdown, they might not do enough if customers maintain maximum social distancing, said Stan Veuger, a resident scholar at the conservative American Enterprise Institute. “For some businesses, it’ll be good enough, but not the ones getting basically no revenue.”
Veuger said he would have preferred to see the forgivable loans get more funds and fewer restrictions, allowing the money to be used for other fixed costs like rent, while retaining the condition that the firms don’t cut staff. He argued it was more efficient and effective than the payments to individuals that are also part of the bill.
“Instead of a guy who makes $3,000 a month losing his job and getting a $1,000 check, the guy would continue to get his $3,000 a month,” he said. “It’s a way to target the people right now, these people in industries that are basically not functioning right now.”
