Miami, FL — U.S. Senator Marco Rubio (R-FL) joined Yahoo Finance to reflect on the first anniversary of the Paycheck Protection Program and recall the success of the program. See below for highlights and watch the interview here.
“Well we didn’t know what to imagine, I mean there was an unprecedented time of tremendous uncertainty. I remember the feeling around here was that we were in a race against time. We didn’t know when the virus would strike Capitol Hill, we didn’t know that there would come a point when we didn’t have enough members in the Senate — because of quarantine or illness — to be able to get anything done. And there was not a lot of certainty about how long businesses were going to find themselves under these restrictions.
“So we were operating under that sort of environment and with a need to create something that had never existed before. And that is, how do we help small businesses survive and float above water and for as many employees as possible to remain attached to their work? Because the idea of millions of people just being turned on the unemployment system — beyond what we already saw — was unimaginable. It would be, I thought, catastrophic, and I didn’t think the system could handle it and I think we were right.”
On the origins of the Paycheck Protection Program’s framework:
“We had begun to work on this by late January, early February. In essence, we saw that there might be some business disruptions in the US as a result of this disease disrupting supply chains, disrupting the global economy, and that somehow impacting the United States. And so we started thinking, you know, how can we give small businesses access to capital, to loans, but with interest rates. So we started the general outlines of this. When the shutdown started in March it became apparent that we would have to go much further than that, this would have to become a direct assistance program and we wanted to tie it to work. So the good news is that we had the existing 7A Program, which sort of gave us the framework of how we would distribute it.
“The notion that we would use the existing emergency loans of the Small Business Administration (SBA) that we use after a hurricane or earthquake — that wasn’t going to work. I mean, setting up a bunch of government tents, and the SBA’s not big enough, and we don’t have an agency in the government that could’ve processed that. So we had the existing 7A system and everybody kind of bought into that. So I think there was a combination of urgency and, frankly, good partners to work with that allowed us to move on this.
“So it was by far the most popular provision in the CARES Act. One that, I think, had the most support and that we probably could have passed as its own bill within a week of starting work on it.”
On whether the Senator would do anything differently given the chance to do PPP over again:
“I mean today there are things we continue to finetune in the program, but back at that time the biggest challenge we had was how [to] onboard new lenders, we knew we would need new lenders. And so I think one of the things that, had we had a chance to do it differently, would be to figure out a way to more quickly get new lenders into the system. In essence, get SBA working — because they didn’t need for us to pass a bill for them to start working on approving and onboarding new lenders, new entities that could begin to process these loans.
“One of the things we didn’t foresee was that a lot of the larger banks would obviously handle commercial clients through the commercial-lending division, but their small business clients were being handled through their business accounts, and the volume there, they didn't prioritize it. And that really became a bottleneck early in the first weeks of the initial program.”
On further stimulus negotiations following the CARES Act:
“If you recall, the Paycheck Protection Program was actually extended a couple of times, there was actually additional money put into it by a unanimous vote. And then it was extended again through August through a unanimous vote.
“I think the challenge with the second assistance support was really a couple of things. Number one was the dollar figure. Republicans had sort of a set number that they wanted to target their relief to and Democrats were insisting on a package that was double that size. And that was the Democrats’ position until after the election. Only in December did Speaker Pelosi come off that. And what we ended up passing...in late December — again, bipartisan, the President signed it — was a bill that was certainly in the same neighborhood as what Republicans had initially offered right before the August recess.
“So, I think there was some political calculation there that was made by the Democrats, I said so at the time. I’m glad we finally got something done in December but...it would have been better to do it in September.”
On the changes made for sole proprietors applying for the Paycheck Protection Program:
“If you make a change in the program on eligibility, I think it’s unfair to the people who at one time applied and were denied. Obviously they could reapply, but I think part of it is can they go back and recoup the cost that they didn’t have at the time.
“At the end of the day, the calculation there needs to be how much money was appropriated for the program, because every dollar you spend retroactive[ly] is a dollar that’s not going to be available for future assistance down the road. Now, we did make the first phase of PPP retroactive in December, so a lot of people or entities are able to go back and apply.
“Look, anytime you make changes to this program...banks and lenders are going to claim that there’s a lot of confusion involved in it. That’s inevitable. But it would be worse to not make the changes. I think the bigger challenge has been, frankly, changes to which entities, how they define who is eligible, and expanding eligibility beyond what Congress intended. Because that begins to create partisan divisions over the program, for a program that’s had broad bipartisan support. And I think it also, as I said, begins to drain away the revenue. The dollars that were put forward for this second phase of PPP were designed on that eligibility criteria. If you add to that eligibility criteria outside of what Congress intended, you’re going to run out of money.”