We write to urge Congress to quickly enact a new phase of federal relief to counter the ongoing threat of widespread small business failures as the economy continues to grapple with the effects of a major public health crisis and the challenges of a slow and uncertain return to normal in the months ahead.

We applaud the bipartisan effort to establish the Paycheck Protection Program (PPP) in the Coronavirus Aid, Relief, and Economic Security (CARES) Act, as well as the passage of the PPP Flexibility Act that provided much-needed changes to ensure the program works better for businesses harmed by the economic crisis. While PPP provided critical stopgap relief, America’s small businesses face a continued threat from low consumer demand and ongoing operational disruption due to COVID-19. According to the Census Bureau, large shares of small businesses believe it will be at least six months before their businesses return to normal levels of operation; in deeply affected industries, that number rises to over 70 percent. One in 10 small businesses believe they will never fully recover.

Federal relief must be responsive to the evolving economic circumstances and needs of small businesses, including nonprofit employers. The next phase of relief must be designed to enable them to survive a prolonged period of lower consumer demand, ongoing operational disruption, and continued uncertainty until the availability of a vaccine and effective therapeutic treatment eliminate COVID-19 as a severe public health concern. Simply extending PPP and expanding its eligibility to a wider range of severely impacted entities alone is not sufficient to address the threat to small employers throughout the country. 

1. Zero-Interest Loans: Zero percent interest rates, coupled with longer loan maturity, would offer certainty and flexibility for small employers, enabling them to take loans large enough to survive a prolonged period of lost revenues and operational disruption, as well as to use the loans in ways that lower their fixed operating expenses. The program should be structured so that both lenders and borrowers are adequately incentivized to participate.

2. Long-Term Maturity: Amortization schedules of up to 30 years will allow businesses to spread the costs of borrowing over a longer period of time and make relief affordable for deeply affected small businesses.

3. Administrative Simplicity: The program’s maximum loan amounts should be determined as a multiple of a borrower’s annual operating expenses or gross receipts. Loan requirements should be straightforward for borrowers to navigate, underwriting standards should encourage a broad range of applicants, and necessary guidance should be provided at the start of the loan program.

4. Broad Usage: Borrowers must be able to use the next phase of relief to address a wide array of operational needs, as well as to improve their balance sheets in order to survive an extended period of weaker demand from consumers. Covered expenses should include maintaining payrolls, refinancing existing loans, purchasing equipment, inventory, furniture and fixtures, and Personal Protective Equipment (PPE), funding tenant improvements, and paying for occupied real estate.

The survival of America’s small businesses is essential to a strong recovery from the recession brought on by the COVID-19 pandemic. We commend Congress for the expedited steps taken early in the crisis to provide relief to millions of small businesses across the country. But the threat remains urgent. Without a new phase of relief tailored to the current challenges, millions of small businesses are at risk of permanent failure. An emergency small business lending facility as described above would address the liquidity and solvency issues new and small businesses will continue to encounter until the public health crisis is resolved.

Thank you for considering this request. 

Sincerely,

 Angel Capital Association

Asian American Hotel Owners Association

Center for American Entrepreneurship Economic Innovation Group 

Experiential Designers + Producers Association Gusto

International Association of Amusement Parks and Attractions

International Association of Exhibitions and Events

International Franchise Association Main Street America

National Association of Theatre Owners

National Tooling and Machining Association 

North American Die Casting Association 

Precision Machined Products Association 

Precision Metalforming Association

Small Business and Entrepreneurship Council

Small Business Majority

Small Business Roundtable

The Payroll Group

U.S. Travel Association

Senator Marco Rubio (R-FL) 

Senator Ben Cardin (D-MD)

Representative Nydia Velazquez (D-NY-07)

Representative Steve Chabot (R-OH-01)