Brookings Institute Convenes Experts to Analyze Paycheck Protection ProgramApril 14, 2020
This week, Detroit Regional Chamber President and CEO Sandy K. Baruah participated in a webinar hosted by the Brookings Institute on the latest small business loan programs. The esteemed panel of speakers also included Brookings Institute Miriam K. Carliner Senior Fellow in Economic Studies Nellie Liang; KeyCorp Chairman and CEO Beth Mooney; American Enterprise Institute Director of Economic Policy Studies Michael Strain; and Hutchins Center Director David Wessel.
The conversation highlighted the status, progress, and challenges of the U.S. SBA Paycheck Protection Program (PPP) as well as a new Main Street Business Lending Program. Some key takeaways include:
- The SBA, like all segments of the economy and society, is not fully prepared to handle a crisis of this magnitude and speed. Baruah cited the SBA as the only existing federal tool to get dollars in the hands of businesses during this crisis, despite its limitations. In its first weeks, the SBA’s capacity has proven difficult to scale against the unprecedented demand. KeyCorp, for example, has processed nine and a half years’ worth of loans over the past two weeks.
- The current $349 billion in funding will not meet the increasing borrower demand. More than $220 billion of this funding has already been committed, and Baruah projects that the program will cost upwards of $1 trillion to meet businesses’ needs.
- A new Main Street Business Lending Program will offer support to businesses too large for small business support and too small to tap capital markets. Unlike the U.S. SBA PPP, this is a Federal Reserve Bank program. Liang explained that this new program will not be beneficial to all borrowers – the support will only be helpful to businesses viable for recovery once the crisis clears.
- Issues for Policy Makers to Consider:
- Adequately funding the program to ensure the needed support can reach businesses.
- Addressing access to the program for those businesses that don’t bank with SBA-certified lender.
- Assuring that smaller businesses with limited professional help and businesses in underserved communities are receiving fair access to the program.
- Continuing to refine processes to ensure the program funds move rapidly to meet the pressing demand while adhering to reasonable accountability and anti-fraud protections.