by Mitch Kokai
Senior Political Analyst, John Locke Foundation
Remember the deal the president signed to save America’s small businesses from ruin during the government’s coronavirus shutdown? The one hammered out by the Senate and Secretary of the Treasury Steven Mnuchin over weeks of tense negotiation while Americans worriedly watched, hoping good news might come before a depression does? The details are out of Treasury now, and it looks like it isn’t going to work for a large number of small business owners after all.
It isn’t going to work because the Senate’s formula allows far too little money to make up for a lost month and get through the following two or more while meeting their demands. The Senate made these demands to protect workers, but did not provide the money a lot of businesses will need to protect workers and themselves. It’s just common sense, they’ll say, to protect workers and the taxpayer in these hard times.
Then, even if there was enough money, it isn’t going to work because Mnuchin crafted loan parameters that make it untenable for nearly all small businesses should the Senate’s demands not be met, which would mean the loan doesn’t qualify for forgiveness. …
… If you don’t make the Senate’s requirements, you have to pay that loan back, and thanks to Mnuchin, you’re not going to be able to do that either. …
… In real life, that means you’re looking at beginning your third quarter in debt, limping on into the winter, losing an entire year’s profits getting your business running again, and owing nearly half of next year’s profits to the bank, all before any other loans you had to take out to keep from bankruptcy.
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