Adoption of the $2.2 trillion CARES Act in late March was a quick and welcome response from a Congress best known for inaction and partisan standoffs. But the COVID-19 legislation wasn't approved without some flaws, most notably in the loans earmarked for businesses through the Paycheck Protection Program.
Fort Wayne business owners Michael and Maureen Catalogna came across one of the problems in trying to access a loan for Catablu Grille. As The Journal Gazette's Brian Francisco reported last week, the U.S. Small Business Administration requires the loans be used within eight weeks, which means the restaurant owners have to spend the money by Monday to qualify for loan forgiveness. They also have to maintain or restore employment at the same level as before the coronavirus pandemic and use at least 75% of the funds for payroll.
As many business owners are learning, however, returning to normal comes only when customers are comfortable returning. With reduced demand, Catablu is still operating with reduced staff.
“We want to use the (loan) money to pay our staff,” Maureen Catalogna said last week. “We want to use the money to solidify our business. ... We just want to be able to use the funds. We just need more time.”
Sen. Todd Young, R-Indiana, held a news conference at the Fort Wayne restaurant to announce legislation to address the issue. Young teamed up with Sen. Michael Bennet, D-Colorado, to sponsor the RESTART Act, which stands for Reviving the Economy Sustainably Toward A Recovery in Twenty-twenty.
The legislation would extend to 16 weeks the loan deployment period for businesses that have seen a revenue decline of at least 25%. It also would establish a new loan program to cover six months of payroll, employee benefits and fixed operating expenses, with a seven-year payback period and a share of loans forgiven based on revenue loss during the pandemic.
The senators' proposal is one needed fix, but it still doesn't address a more troubling problem with the $659 billion Paycheck Protection Program: transparency.
We know many businesses struggled to tap into the loan program. We know banks couldn't keep up with the flood of applications and the money ran out in less than two weeks. We also know major companies, including the Los Angeles Lakers and Shake Shack, were among the first to be approved for loans, although each of those organizations returned the money after the information was revealed and an outcry ensued.
What we still don't know is the identity of all of those who received Paycheck Protection Program money. Several major news organizations have sued the Small Business Administration to find out. The agency isn't saying the information won't be disclosed; it is simply stalling on its release. The agency offers only aggregate numbers on its website.
“At this time, the agency is focusing its efforts on assisting small businesses during this unprecedented disruption to the economy due to the coronavirus (COVID-19) outbreak,” reads a posted message.
ProPublica, a nonprofit news service, is among the plaintiffs.
“Enormous amounts of taxpayer money are being committed to what is supposed to be a lifeline for millions of struggling American businesses,” said ProPublica General Counsel Jeremy Kutner. “The public has an urgent right and need to know how it is being spent, and whether it is being directed to those most in need. We are pleased to be acting along with colleagues at other leading news organizations to make sure this information promptly sees the light of day.”
A bill that would have required the Trump administration to release details about loan recipients and lenders was rejected by the U.S. House last week after Republicans opposed it. There's no excuse for concealing who has received federal loans. A transparency fix is overdue.