Washington D.C. — U.S. Senator Marco Rubio (R-FL), Chairman of the Senate Committee on Small Business and Entrepreneurship, convened a hearing titled, “Small Business in Crisis: The 2020 Paycheck Protection Program and its Future.”
A live-stream of the hearing can be found on the committee’s website here.
Chairman Rubio’s opening remarks as prepared can be found below.
Chairman Rubio: “I would like to thank everyone for joining us, both in person and virtually, and welcome our witnesses before the Committee.
“The coronavirus pandemic has affected virtually every part of our lives; our health, our education, our jobs, our communities, our families, and our economy.
“The pandemic and nationwide lockdowns were then—and remain now—a crisis for America’s small businesses.
“In March, as the pandemic and mandatory lockdowns began crushing small businesses, the Senate and bipartisan members of this Committee responded by coming together and enacting historic support for small businesses in the CARES Act.
“One of those lifelines was an entirely new program, built upon the network of community banks that the SBA has worked with for many years, to deliver capital to small businesses.
“That support was the Paycheck Protection Program. And, in this crisis, we called upon every inch of America’s financial infrastructure to deliver the help it brought to small businesses.
“Now, in retrospective, it is clear that the PPP has been the most effective piece from the bipartisan CARES Act.
“PPP is arguably the largest singular federal fiscal relief program enacted in recent history, delivering more than $525 billion to small businesses and nonprofits across the country.
“PPP had two main goals: help workers keep their jobs, and protect small businesses from being forced to permanently close their doors.
“Under the crisis conditions in which we created the program, to achieve these goals required setting a third goal: to deliver the support PPP would provide with all possible speed.
“Looking back, I believe it is more than fair to say that PPP accomplished all three of those goals.
“To the goal of worker retention, businesses receiving PPP report saving up to 55 million jobs.
“In May 2020, the first jobs report after the full amount of PPP loans was disbursed, showed the biggest month for jobs gained on record since 1939—beating economists’ expectations by over 10 million jobs.
“To the goal of helping small businesses, more than 5.2 million small businesses and nonprofits received a PPP loan.
“By the end of May, the U.S. Census Bureau reported that more than 70 percent of all small businesses in the entire country received PPP loans.
“To the goal of delivering assistance with haste, the SBA approved nearly $350 billion in PPP loans in just two weeks.
“That is, by far, and by any measure, the fastest delivery of funds at this scale for a fiscal policy program in modern history.
“This program was a tremendous success in meeting the goals that we created it to meet.
“And now, it is time to do it again.
“The work that the first round of PPP began, though successful, it remains incomplete.
“The pandemic is still raging. Lockdowns are again being placed on small businesses, and consumer activity is falling.
“By enacting a second round of PPP, we can build upon the successes of the first round, fix problems identified, and protect small businesses through the winter.
“As we consider a second round of PPP funding, this hearing provides as a good opportunity to take stock of what we learned in the first round.
“The priority of speed that we gave the program, however necessary, created some initial problems in implementation.
“For example, the average loan size approved at the outset of the program was larger, and a number of companies that had access to capital elsewhere, received PPP loans.
“That problem was resolved. Yet the program’s critics persist in saying that the program was skewed toward larger businesses.
“The facts are that 70 percent of PPP loans went to small businesses with 10 or fewer employees.
“The average business receiving a PPP loan had 13 employees.
“And 80 percent of all funds went to businesses with fewer than 200 employees, even though all businesses with 500 or fewer employees were eligible.
“Another example is issues related to fraud. We have learned a good deal about the need for inspection and oversight by the administering agencies.
“However, the evidence so far does not suggest a fraud rate in PPP that is higher than that of other CARES Act programs.
“And the evidence suggests that PPP suffers from a much lower risk of fraud than the SBA’s EIDL program.
“One of the reasons for this success has been the fact that the banks and credit unions delivering PPP are still subject to federal anti-fraud regulations.
“This public-private partnership, in combination with increased SBA and Treasury program oversight, allowed us to strike an important balance of ensuring fraud protection, while also distributing program funds in a timely manner.
“Another example is with respect to the equitable distribution of funds to small businesses owned by all races and ethnicities.
“As we explored in a hearing this past July, we have learned the importance of community financial institutions, like CDFIs, and technical assistance grants through agencies like the Minority Business Development Agency.
“Though there was certainly a disparity at the program’s outset, the heroic work of community financial institutions overcame it.
“A survey completed by Goldman Sachs found that, by the conclusion of the program, 93 percent of black business owners applied for a PPP loan, and of those who applied, 95 percent received a PPP loan.
“According to the SBA’s demographic survey data, minority-owned small businesses received a higher percentage of PPP loans than their relative share of business ownership in the United States would otherwise suggest.
“Black and Hispanic-owned small businesses account for 7.8 percent of total small businesses, yet successfully received 10.6 percent of the total PPP loans disbursed.
“Despite some negative narratives in the media, I have heard loud and clear about the success of PPP from small business owners throughout the country.
“For instance, Between Pixels in Marietta, Georgia said, "we applied for and received the PPP loan, which helped us focus our energy on pivoting our business model. The funds allowed us to reassign staff to these opportunities rather than cut positions, which ended up making up for the revenue we lost from our traditional services.'
“Mike Zaffroni, the owner of Liberty Landscape in Jacksonville, Florida said, “if I had to sum up the PPP loan in one word for us, it gave us confidence. We would be in a much different position without it.”
“These represent only a small portion of the comments we have received from small businesses about the program.
“While there are better days ahead with the promise of a successful vaccine, we have an immediate need that requires action.
“Businesses need more help to make it through this winter, given a potential second wave looming and impending government lockdowns.
“Congress has voted unanimously three separate times to fund and enhance PPP and it is far past time for us to come together once again.
“Today’s hearing provides us an opportunity to evaluate the first round of PPP and to discuss the future of the program, with this goal in mind. I look forward to hearing from today’s expert panel on their experiences with PPP.”
A live-stream of the hearing can be found on the committee’s website here.
Chairman Rubio’s opening remarks as prepared can be found below.
Chairman Rubio: “I would like to thank everyone for joining us, both in person and virtually, and welcome our witnesses before the Committee.
“The coronavirus pandemic has affected virtually every part of our lives; our health, our education, our jobs, our communities, our families, and our economy.
“The pandemic and nationwide lockdowns were then—and remain now—a crisis for America’s small businesses.
“In March, as the pandemic and mandatory lockdowns began crushing small businesses, the Senate and bipartisan members of this Committee responded by coming together and enacting historic support for small businesses in the CARES Act.
“One of those lifelines was an entirely new program, built upon the network of community banks that the SBA has worked with for many years, to deliver capital to small businesses.
“That support was the Paycheck Protection Program. And, in this crisis, we called upon every inch of America’s financial infrastructure to deliver the help it brought to small businesses.
“Now, in retrospective, it is clear that the PPP has been the most effective piece from the bipartisan CARES Act.
“PPP is arguably the largest singular federal fiscal relief program enacted in recent history, delivering more than $525 billion to small businesses and nonprofits across the country.
“PPP had two main goals: help workers keep their jobs, and protect small businesses from being forced to permanently close their doors.
“Under the crisis conditions in which we created the program, to achieve these goals required setting a third goal: to deliver the support PPP would provide with all possible speed.
“Looking back, I believe it is more than fair to say that PPP accomplished all three of those goals.
“To the goal of worker retention, businesses receiving PPP report saving up to 55 million jobs.
“In May 2020, the first jobs report after the full amount of PPP loans was disbursed, showed the biggest month for jobs gained on record since 1939—beating economists’ expectations by over 10 million jobs.
“To the goal of helping small businesses, more than 5.2 million small businesses and nonprofits received a PPP loan.
“By the end of May, the U.S. Census Bureau reported that more than 70 percent of all small businesses in the entire country received PPP loans.
“To the goal of delivering assistance with haste, the SBA approved nearly $350 billion in PPP loans in just two weeks.
“That is, by far, and by any measure, the fastest delivery of funds at this scale for a fiscal policy program in modern history.
“This program was a tremendous success in meeting the goals that we created it to meet.
“And now, it is time to do it again.
“The work that the first round of PPP began, though successful, it remains incomplete.
“The pandemic is still raging. Lockdowns are again being placed on small businesses, and consumer activity is falling.
“By enacting a second round of PPP, we can build upon the successes of the first round, fix problems identified, and protect small businesses through the winter.
“As we consider a second round of PPP funding, this hearing provides as a good opportunity to take stock of what we learned in the first round.
“The priority of speed that we gave the program, however necessary, created some initial problems in implementation.
“For example, the average loan size approved at the outset of the program was larger, and a number of companies that had access to capital elsewhere, received PPP loans.
“That problem was resolved. Yet the program’s critics persist in saying that the program was skewed toward larger businesses.
“The facts are that 70 percent of PPP loans went to small businesses with 10 or fewer employees.
“The average business receiving a PPP loan had 13 employees.
“And 80 percent of all funds went to businesses with fewer than 200 employees, even though all businesses with 500 or fewer employees were eligible.
“Another example is issues related to fraud. We have learned a good deal about the need for inspection and oversight by the administering agencies.
“However, the evidence so far does not suggest a fraud rate in PPP that is higher than that of other CARES Act programs.
“And the evidence suggests that PPP suffers from a much lower risk of fraud than the SBA’s EIDL program.
“One of the reasons for this success has been the fact that the banks and credit unions delivering PPP are still subject to federal anti-fraud regulations.
“This public-private partnership, in combination with increased SBA and Treasury program oversight, allowed us to strike an important balance of ensuring fraud protection, while also distributing program funds in a timely manner.
“Another example is with respect to the equitable distribution of funds to small businesses owned by all races and ethnicities.
“As we explored in a hearing this past July, we have learned the importance of community financial institutions, like CDFIs, and technical assistance grants through agencies like the Minority Business Development Agency.
“Though there was certainly a disparity at the program’s outset, the heroic work of community financial institutions overcame it.
“A survey completed by Goldman Sachs found that, by the conclusion of the program, 93 percent of black business owners applied for a PPP loan, and of those who applied, 95 percent received a PPP loan.
“According to the SBA’s demographic survey data, minority-owned small businesses received a higher percentage of PPP loans than their relative share of business ownership in the United States would otherwise suggest.
“Black and Hispanic-owned small businesses account for 7.8 percent of total small businesses, yet successfully received 10.6 percent of the total PPP loans disbursed.
“Despite some negative narratives in the media, I have heard loud and clear about the success of PPP from small business owners throughout the country.
“For instance, Between Pixels in Marietta, Georgia said, "we applied for and received the PPP loan, which helped us focus our energy on pivoting our business model. The funds allowed us to reassign staff to these opportunities rather than cut positions, which ended up making up for the revenue we lost from our traditional services.'
“Mike Zaffroni, the owner of Liberty Landscape in Jacksonville, Florida said, “if I had to sum up the PPP loan in one word for us, it gave us confidence. We would be in a much different position without it.”
“These represent only a small portion of the comments we have received from small businesses about the program.
“While there are better days ahead with the promise of a successful vaccine, we have an immediate need that requires action.
“Businesses need more help to make it through this winter, given a potential second wave looming and impending government lockdowns.
“Congress has voted unanimously three separate times to fund and enhance PPP and it is far past time for us to come together once again.
“Today’s hearing provides us an opportunity to evaluate the first round of PPP and to discuss the future of the program, with this goal in mind. I look forward to hearing from today’s expert panel on their experiences with PPP.”
