Welcome to the Small Business Rundown. Each day, we bring you stories that impact small business owners and their workforce.
Small Business News Highlights for May 20:
- House to vote on legislation to fix PPP
- Magic Johnson offers $100 million in loans to minority-owned SBOs
- SBOs struggle to solvent in newly “reopened” operating environment
Congress to vote on bill for PPP fixes
“These provisions are not political. These provisions are generally well-accepted, generally bipartisan, generally desired by small businesses across the entire country.”
In response to mounting complaints across the country about the Paycheck Protection Program’s (PPP) myriad problems, the House of Representatives is scheduled to vote next week on a stand-alone bill that would address some of the biggest concerns.
The new legislation will extend the amount of time that business owners have to rehire employees, as well as the repayment period, and also do away with the 75/25-percent rule that has caused businesses with high fixed costs great concern.
The Senate will need to approve the legislation in order for it to become law. And while there appears to be bipartisan support for the bill in the Senate, it’s appears unlikely that they will vote before adjourning for Memorial Day.
Magic Johnson to provide $100 million in loans to minority-owned SBOs
“We have to remember that these businesses have been in urban communities for a long time. They’ve been doing great things, and they probably didn’t have a relationship with the banks when the stimulus package went out. So now, we’re able to say, ‘Hey, you can have a relationship with us.’”
NBA Hall of Fame basketball star Magic Johnson has announced that his company will provide $100 million to fund loans to minority-owned businesses that were unable to secure rescue loans through Paycheck Protection Program’s earlier rounds of funding.
A lack of established relationships with banks has caused many African American and Latino business owners to miss out on rescue money for the PPP, a problem that Johnson is seeking to rectify. Magic Johnson Enterprises will partner with MBE Capital Partners to distribute the loans through the PPP.
All 50 states reopen … in some capacity
“The other concern is when we talk about the reopenings, how reopened are we really going to become? That depends on how many businesses survive to the other side of the reopenings.”
Now that every state in the Union has reopened in some capacity, small businesses must find a way to survive within the new socially-distanced operating conditions. Federal Reserve Chairman Jerome Powell acknowledged that many SMBs will struggle to stay solvent during this time and urged Congress to pass additional stimulus measures, noting that the Fed can not prop up the economy alone.
With narrow operating margins and few ways to leverage capital, small businesses will be hard-pressed to ride out the pandemic-related restrictions indefinitely, making assistance from the government even more crucial.