Shark Tank’s Barbara Corcoran hasn’t been shy with her criticism of the government’s aid for small businesses during the coronavirus shutdown.
When she saw the startups she’s backed struggle to apply for Paycheck Protection Program (PPP) loans, she called the Small Business Administration’s efforts “horrendous.”
But now, after a second round of funding and the ire of the public guarding against large corporations taking money they otherwise might not need, the program seems to be working more efficiently in getting government money to small businesses looking to keep employees on their payroll.
And business owners are pushing for two key tweaks to the program. First, businesses wish to use the government funding over a period of time longer than just the mandated eight weeks. Second, businesses are also asking to no longer dedicate at least 75% of PPP money to payroll costs and instead are looking to direct some funds to rent and other expenses.
As Corcoran sees it, lifting those restrictions which were originally intended to keep workers from getting laid off, might actually help as it will let business owners spend the money as they know is best for their companies.
“A lot of my small businesses that I’ve invested in can't open legally and yet they have to keep people on payroll doing nothing to make use of that package,” she said. “I wish there had been more leeway and say you could use the funds for your employees when your business could open. If you think about it, it’s putting the cart before the horse.”
Some businesses that received PPP loans, which effectively become free government grants if all restrictions are satisfied, haven’t spent anything out of fear they won’t be able to meet the current rules. As Portland, Ore. restaurateur Naomi Pomeroy told Yahoo Finance, those restrictions have made her not tap the $175,000 her business received.
“We all want to use our [PPP] money. I’m sitting on it. I’d like to be able to use that money but not if it means bringing my staff off unemployment only to furlough them again. It just seems like a real waste,” said Pomeroy.
Extending the timeline to spend PPP
As it stands, Republicans and Democrats seem aligned on lifting those restrictions to help businesses feel more easy about putting money to work. In a meeting with representatives in the restaurant industry Monday, President Trump seemed shocked at how aligned everyone was on requesting extending the timeline to spend PPP money from eight weeks to 24 weeks. He then turned to Treasury Secretary Steven Mnuchin who echoed support from Democrats.
“We’re working on a technical fix that we do have bipartisan support for it to extend it. I’m not sure it’s that long, but I’ve spoken to the SBA committee and there is bipartisan support, so we’re working on that,” he said.
Given that alignment seems to be there, and the fact that Sen. Marco Rubio has also already voiced his support for the tweaks as well, Corcoran stressed her frustration that Congress hasn’t been able to issue the fix yet as businesses weigh difficult decisions to stay afloat.
“They are spending on people to do nothing and when they can open they won't have the money to support them so it’s a little crazy,” she said.