When the Covid-19 pandemic hit the United States earlier this year, many companies were forced to close indefinitely, and had to make difficult decisions about what to do for their workers. The PPP, created through the CARES Act, gave these companies the option of receiving low-interest loans to cover payroll and a limited portion of other expenses. Loans could be converted into grants if companies used most of the money to keep workers on their payrolls.
While people may be caught looking at who exactly benefited from PPP loans, it is much more important to focus on how we can tackle the very real challenges that still threaten workers and small businesses. The country’s economy already suffers from dangerous levels of monopoly power that raise prices, harm workers, and inhibit innovation and growth.
The widespread closure of small businesses would only further enhance corporate consolidation. With virus cases increasing in many parts of the country, threatening to halt efforts to “reopen” the economy, Congress must recover from the flawed approach embodied in the PPP and provide additional support to small businesses and their workers, and Quick.
To do this, the government must step in and directly assume payroll obligations for companies that have been hard hit by our current economic crisis. By expanding existing tax credits that offer businesses support for their payroll obligations, Congress can quickly provide affected small businesses with funds to retain and rehire their workers.
By operating through the tax system, such proposals will provide relief to all businesses in need and ensure that government support is used to keep people employed. This must be combined with continued support for expanded unemployment insurance to ensure that workers receive support regardless of their employers’ decisions.
Second, we should provide targeted and targeted grants to Black and Latinx-owned small businesses, which have performed particularly poorly on PPP. Finally, we should provide grants (or, in the worst case, low-interest loans) to small businesses to help cover non-payroll costs, such as rent, that could be taking them out of business.
We can improve PPP and prevent thousands of small businesses from failing and millions more workers being left behind. That, not the latest celebrity brand to receive PPP funding, should be Congress’ focus in the coming weeks.
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