EDITORIAL: Next time, make smaller businesses the priority
The list reads like a business who's who of York County.
Manufacturers, real estate firms, attorneys, restaurants, car dealerships, nonprofits, health organizations, construction businesses. All hurting as the coronavirus shutdown took hold, all looking for help from a government loan program.
And the help was there for many. The Paycheck Protection Program, part of the CARES Act federal stimulus package passed in late March, was intended to give small businesses funds to keep employees on the payroll while we all worked together to get the coronavirus pandemic under control.
That was the plan, anyway. Looking back three months later, we can see that the execution might not have turned out exactly as planned.
Dispatch reporter Logan Hllinger took a deep dive into new data from the Small Business Administration this week showing who received the initial $349 billion in forgivable loans. That money was gone in just two weeks, and Congress approved an additional $310 billion late April.
The loans are forgiven if at least 60% of the funds are used for payroll, lowered from the original 75%.
The numbers out this week show that in York County, at least $232 million in loans were doled out under the program. Of that, loans of less than $150,000 accounted for roughly $62 million, or 27%. About $170 million, or 73%, went to about 450 firms seeking more, often significantly more, up to $10 million.
The largest loans in York County, ranging from $5 million to $10 million, went to SpiriTrust Lutheran, OSS Health, Precision Components Group and Wagman Inc.
The loan figures are given as a range, so the exact amounts aren't known, and the figures used by the Dispatch are probably in the low range. For example, Maple Donuts received between $2 million and $5 million, but it's impossible to tell the actual dollar amount based on available data.
In York County, roughly 81% of the 2,076 loans distributed were for less than $150,000, even as that group's share of the dollar total was less than 30%.
This is the story that played out across the country. According to Politico, only 4% of the loans made in the first batch of funding were for more than $1 million, but they ate up 44.5% of the initial $349 billion Congress put into the program.
This isn't what was supposed to happen with this taxpayer money. These funds were meant to make sure the truly small businesses, the businesses with less than 500 employees that make up 49% of the jobs in this country, survived the shutdowns and kept paying workers.
Instead, larger companies with existing ties to the large banks charged with doling out the loans scooped up the funds before the smaller businesses even finished the paperwork.
Next time — and even though the Senate is dragging its feet, there has to be a next time for stimulus funding — there must be a better system in place to make sure the funds get to the truly small businesses.
Politico suggests capping the next loans at $1 million, saying that in the first round of stimulus money, such a cap would have freed up $150 billion for the smaller businesses that were shut out.
Perhaps the next round could split the money up more, with the small loans of $150,000 or less getting a percentage of the pie more in line with the number of people who depend on them.
The shutdowns have been hard on every business and every person. Larger businesses need help too, we get that. But the small businesses that are the backbone of the country, the restaurants and corner stores and garages, don't need to fight with the big boys to get the money. Next time, we have to make sure they are first in line.