Studies show that over 57% of small businesses were struggling to remain open before COVID-19, and the mandatory shutdowns only served to underpin the fragility of the small business sector. The tragedy of PPP is that Congress authorized a $525 billion check that, despite its loud boasting, wasn’t actually designed to help small businesses survive.

The CARES Act  designed a program that used average payroll expenses to determine the amount of PPP funds available.  However, a small business’ expenses can often exceed its payroll obligations, and because of this reality the CARES Act placed many struggling business owners in a position where they must decide to either maintain payroll or pay other related expenses in order to keep the business alive.

Over 50% of small businesses fail within the first 5 years of opening.

The PPP funding effort has been met with criticism over allowing affiliates of publicly traded corporations to access this money. Nevertheless, the NBER study by members of Harvard University, the University of Chicago, and the University of Illinois, along with data from the Small Business Administration & Federal Reserve, all show that funding small businesses with approx. 60 hourly employees, for example, has a much greater potential to both save jobs and save the businesses overall, than funding the over 60% of small businesses who have less than 5 employees. By focusing on larger employers, the same dollar could have saved 3 times as many employees. The Sense of the Senate, as stated in the CARES Act, largely excluded the larger employers from receiving PPP funds, resulting in a directive that would thus lead to $262 billion in PPP funding being wasted before the first check was ever issued.  

Perspective: A seed is an incredible thing. Take a seed potato, for instance: you can eat the potato itself, carelessly destroying the seed, or you can plant it and reap a greater return.  By ineffectual spending, Congress has seen fit to eat the seeds that they first took from the American Citizen in order to satisfy a Marxist taste bud.  The CARES Act did not contain justifiable spending and should be met with a vote against every member of Congress who supported it.

James M. Spillers