The U.S. government has officially made available a second round of funds for businesses suffering as a result of the COVID-19 pandemic while the North Carolina government debates doing something similar on the state level.
According to an early April report from the U.S. Chamber of Commerce, around a quarter of small businesses in the U.S. have temporarily shut down due to COVID-19, with 40 percent of those left over saying they would likely have to shut down within a couple weeks because of the loss of revenue.
To help stem the tide of shutdowns, the federal government enacted the Payroll Protection Program on April 3 as part of the CARES Act, but the available money was sapped by April 16. In North Carolina, banks approved more than 23,000 loans to small businesses worth $5.7 billion, according to a news release from the N.C. Bankers Association. According to an April 25 article in Forbes, 1.6 million businesses across the country received relief funds.
The funds elapsing led to calls from many — including U.S. Rep. Mark Walker (R-Greensboro), who represents Chatham County in the U.S. House of Representatives — calling for a second round, especially after an Associated Press investigation revealed that at least 94 publicly-traded companies received a $365 million in loans, despite the money being intended for small business.
“The small businesses needing help in N.C. who I am talking with every day don’t have shareholders,” Walker tweeted on April 21, linking to the AP article. “In replenishing the PPP funds, banks and big businesses should not be sorting winners and losers. We want all of our small businesses to be winners here.”
Congress turned around quickly, passing a second bill setting aside $310 billion for the PPP on April 23. It was supported by Walker, along with Reps. Ted Budd (R-Davie County) and David Price (D-Raleigh). Budd and Price currently represent districts which will include Chatham starting next year and both are seeking re-election on November ballots.
“I know small business owners do not have the luxury of time — they need relief now,” Price tweeted on April 17. “I support efforts to quickly replenish funding and implement reforms to not only improve the process but ensure independent small businesses get their fair share of funding.”
In a press release on the day of the vote, Budd said, “Renewing the Paycheck Protection Program was a necessary step to provide additional lifelines to workers and job creators across the country. The pain of losing a job or being forced to lay someone off is something far too many of our fellow Americans are facing.”
The new PPP funds were made available on Monday.
North Carolina’s government may not be too far behind in providing its own assistance for small businesses. The Economic Support Working Group of the N.C. House Select Committee on COVID-19 has supported a bill that would appropriate $75 million of state money to the Golden LEAF Foundation (GLF), a nonprofit that administers and supplies grant funds across the state, to add to its NC COVID-19 Rapid Recovery Loan Program.
Golden LEAF had made $15 million available through a variety of funders early in the pandemic, but those funds were claimed. This second pot of money would “provide emergency bridge loan funding for small businesses adversely affected by the COVID-19 epidemic,” according to an analysis of the bill by legislative counsel Dan Effefagh.
“In periods of past disaster, GLF has provided low-interest emergency bridge loans, and the State has provided subsequent funding for longer-term small business loans with rates generally less favorable than federal SBA loan rates and, in some instances, commercially available credit,” Effefagh wrote. “The current bill draft would provide direct funding for the initial emergency, low-interest loans.”
N.C. Rep. Robert Reives II (D-Chatham), a member of the Economic Support Working Group, told the News + Record that Golden LEAF “has really stepped up.”
“It’s not the same as the SBA [Small Business Administration] loans that lot of people have heard about that it’d be coming in for the Payroll Protection Act, but it’s more ‘trying to get you through until you can get those funds’ type of loans,” Reives said. “We just recommended a bill to increase that amount, but Golden LEAF’s really trying to make sure that they’re there to kind of fill in the gap.”
Reives added that the Golden LEAF funds may become part of a larger spending bill from the state, but said that funding pot would likely “stay as it is.”
Reporter Zachary Horner can be reached at zhorner@chathamnr.com or on Twitter at @ZachHornerCNR.