Taking a Pass on PPP
by Bob Hance on Monday, July 6, 2020
Too many times, legislation that is well conceived and vetted, sometimes with years to fruition, falls short of its intended goal.
So legislation that is hurried to the table stands little chance of full success.
This was the case with the Paycheck Protection Program (PPP), a Small Business Administration loan intended to help small businesses keep their workforces employed during the Coronavirus crisis. Well-intended? Definitely. Much needed? Of course. Poorly constructed? Yup.
The rollout was a logistical mess, and the program ran out of money way too soon and had to be restocked through a second bill. And it turns out that many “small businesses” that aren’t really all that small accessed the funding. We all heard the news stories of Shake Shack and Ruth’s Hospitality Group, and while many of those falling under media scrutiny did return the funds, other big companies held on to the money.
While many cooperatives across the country applied for and received these funds, including most in Michigan, your cooperative did not. In fact, I also serve on a national and regional cooperative board and found myself voting against the idea of participating in the PPP. While I respect their right and belief that receiving these funds will ultimately best serve their respective memberships, I believe some should have taken a pass.
PPP was intended to help those at risk of losing their business as the economy shut down, guaranteeing the ability to keep their workers employed. Everyday we’re hearing stories of mom-and-pop shops, restaurants, and other retail outlets who are permanently closing their doors because of the massive losses during the shutdown.
As a part of the critical infrastructure, we were never at risk of closing our doors. Rural electric cooperatives in particular have access to lines of credit that allow us build and maintain critical infrastructure. We have secure, low-interest, backstop funding sources that we can tap into to ensure that our electric and telecommunications services are always on and available to our customers.
Yes, PPP was essentially designed to offer potentially “free” money to qualified businesses, and many co-ops who accessed funds were rightfully qualified. But I believe that those of us with access to other resources and not really at risk of shutting down should have taken a pass on these funds for the benefit of those who don’t have alternatives.
Many of our own commercial customers are hurting, and many of our residential customers have lost jobs. I have extreme empathy for those who are truly struggling. In my ideal world, I would distribute the million-plus dollars that would have been available to us to our own customers who were deeply impacted. However, at the end of the day I can rest my head on my pillow knowing that we did the right thing and did not take dollars that were intended for those businesses truly facing the reality of closure.