Both Republican Sen. Cindy Hyde-Smith and Mike Espy, her Democratic opponent in this November’s general election, tout the virtues of the Payroll Protection Program that provides forgivable loans to allow small businesses (less than 500 employees) to meet their payroll during the current economic crisis caused by the COVID-19 pandemic.
Both support expanding the program that was originally passed by Congress as part of a larger federal rescue package in late March.
“It is a no-brainer,” said Espy recently of replenishing the program that has run out of money.
Hyde-Smith had touted expanding the program, but has been critical of the congressional Democratic leadership for insisting that other items be included in the legislation.
The $484 billion bill passed Tuesday by the Senate includes an additional $310 billion for the Payroll Protection Program, plus funds for hospitals that have been hit hard in dealing with the pandemic and funds for coronavirus testing. The original small business loan program that ran out of money earlier this month contained $350 billion that was distributed to more than 1.6 million businesses nationwide.
The bill expanding the Payroll Protection Program, expected to pass in House on Thursday, will be the third providing funds to help fight the pandemic and to provide funds to citizens and companies to help alleviate the economic hardship caused by COVID-19. A fourth bill is expected to be taken up. Funds to offset lost revenue on both the state and local levels likely will be part of that package. Democrats tried unsuccessfully to include funds to offset lost state and local revenues in the current bill working its way through Congress.
“Aid for state and local government could be negotiated as part of future legislation,” said Justin Brasell, a spokesperson for Hyde-Smith.
“That will happen,” Espy said of funds to help state and local governments that will be hit by the loss of tax collections because of the economic slowdown.
A study by the Center for Budget and Policy Priorities, said, “Without substantially more aid, states — which are required to balance their budgets every year, even in recessions and depressions — will almost certainly lay off teachers and other workers and cut health care, education, and other key services, making the economic downturn more severe.”
President Trump has indicated via twitter he supports help for state governments in legislation that presumably will be taken up after Congress passes the current legislation.
Officials are hoping the Paycheck Protection Program will help thwart the current economic slowdown.
In Mississippi, during the previous round of funding 20,748 small businesses were awarded $2.48 billion in loans that if used to pay employee payroll for up to eight weeks and for other expenses such as rent, mortgage and utilities, will be forgiven.
In Mississippi, according to Bloomberg, 67 percent of eligible payrolls were funded through the loan program. The study indicated that so-called Red states or Republican states fared better under the program than did so-called Blue or Democratic states. For instance, in Nebraska loans were granted for 81 percent of the eligible payroll compared to 38 percent in California and 40 percent in New York, two solid blue states.
Mississippi ranked 33rd in terms of the cumulative amounts of its loans received and total number of businesses receiving the loans. California and Texas were the top two states in terms of receiving loans and the number of businesses receiving the loans.
While Espy said he supports the Payroll Protection Program, he said he hopes loopholes will be closed in legislation expanding the program so that some big companies, such as large restaurant chains, are not given the loans. He said there are other federal programs to help the larger companies.
While the program generally is popular, there have been complaints that some small businesses, particularly minority-owned or rural companies, are having a more difficult time obtaining the loans. He said that is why it is essential that so-called Community-based Financial Institutions that specialize in helping companies that might struggle to obtain traditional loans be allowed to participate in the program.
Under the program, the small businesses apply to lending institutions for loans. But if the loans are used to continue to pay their employees’ salaries, they are paid back through federal funds.