Congressman Rick Allen from Georgia’s 12th District voted for all three major pieces of legislation in response to the COVID-19 pandemic, including the $2 trillion CARES Act with its provisions for direct payments to most families, expanded unemployment benefits for affected workers and assistance to businesses.
President Donald Trump signed the Coronavirus Aid, Relief and Economic Security, or CARES, Act into law Friday.
“Although this bill was far from perfect, it does provide direct relief for Americans, it allows small businesses to access new emergency loans, and it will continue to invest in new vaccines and medicines so we can aggressively combat the spread of the coronavirus,” Allen told reporters in the district Tuesday.
He described the record economic stimulus spending as unprecedented action for an unprecedented time and expressed hope for a “V-shaped,” rapid recovery after the contagion subsides.
Summarizing aspects of the CARES Act during a telephone press conference, Allen referred to the Paycheck Protection Program, a newly created class of forgivable loans backed by the Small Business Administration, as “the most important provision in the new stimulus bill for the majority of small businesses.”
The legislation sets aside federal funding to guarantee $349 billion in loans that would be issued through lending institutions such as banks and credit unions. The SBA already guarantees other types of loans through a network of more than 800 lenders.
“The Paycheck Protection Program creates a type of emergency loan that can be forgiven when used to maintain payroll for eight weeks and expands the network so that more banks, credit unions and lenders can issue those loans,” Allen said in his prepared remarks. “The basic purpose is to incentivize small businesses to not lay off workers and to then rehire laid-off workers that lost jobs due to the COVID-19 disruptions.”
Besides payroll expenses, the new loans can be used to cover a business’s rent and utilities and other cash flow needs.
The Statesboro Herald asked Allen if the Paycheck Protection Program is better than alternatives and whether, as an advocate for free enterprise, he thinks businesses should be cautious about entangling themselves with the federal government. Allen, a Republican from Augusta, is the founder of a regional construction company.
“We’ve never seen anything like this. ..,” he said. “Although we’ve had some viruses to deal with, nothing ever has happened like this, and when you have a situation where the only way to contain and save life is to work remotely, from home, to basically shelter at home unless you have to go out and buy essentials, and what we did is we asked those businesses, particularly the hospitality industry and retail, (to) largely shut down.”
The government asked these business sectors to do that to save lives, and so in this unprecedented situation, the government is taking unprecedented steps to help business, he reasoned.
Allen said he helped get the provision into the bill that requires Paycheck Protection loans to be provided through private lenders, such as local banks. This is a distinction from SBA disaster loans, a separate program that is funded directly from the U.S. Treasury.
“Of course I had talked to a lot of businesses and they wanted to keep their employees on the payroll, but you can’t do that indefinitely … so we got together and we came up with this eight-week period that we will loan the money to a small businesses to make their payroll, and that’s for payroll of people who make under $100,000 a year,” he said.
With that limitation, the loan money will “take the form of a grant” for eight weeks of qualifying small businesses’ payroll costs, he added. He described it as a way to “bridge” businesses to a time of economic recovery.
“Three weeks ago we had a $23 trillion economy,” Allen said. “The small business community largely built that economy; 70% of all new jobs created are created by small business. I’ve seen it all over the district and all over Georgia.
“And so, somehow we had to bridge this thing so that what we’re hoping for is that when we get through this – and we will – that we will have a V-shaped recovery. …,” he continued. “Will the economy automatically return to 23 trillion? Likely not, but it can recover substantially from where it is right now.”
The Paycheck Protection spending is also an alternative to having even more people apply for unemployment benefits, Allen said.
“It’s really less expensive to keep them on the payroll and allow these companies to keep employees even though some may be staying home,” he said.
Business owners will be able to apply for a Paycheck Protection loan through a regular lender that is part of the SBA guaranteed loan network.
The massive CARES Act also includes more funding for SBA disaster loans specifically for economic injuries caused by COVID-19. For these loans, online applications can be made through disaterloan.sba.gov.
A business could get both a Paycheck Protection Loan and an Economic Injury Disaster Loan as long as they are not used for the same expenses, Allen said.
For both programs, eligible small businesses are generally those with up to 500 employees, although certain types of businesses with up to 1,500 employees can qualify, as can many nonprofit organizations.
As has been widely reported, the CARES Act also provides for most adults with annual incomes less than $75,000 to receive a check for $1,200, and likewise for married couples with combined incomes less than $150,000 to get a check for $2,400 directly from the federal government, plus $500 for each eligible child.
Called tax rebate checks, these will be reduced for people with higher incomes, phasing out completely at $99,000 for individuals and $198,000 for married couples.
The CARES package also contains specific financial support for airlines and farmers.
Other COVID bills
The first phase of COVID-19 legislation, which Allen also supported, was the original $7.8 billion in emergency supplemental appropriations, which included more than $4 billion for diagnostic testing, treatments and vaccine development, plus $2.2 billion for the Centers for Disease Control and Prevention.
The second phase was the Families First Coronavirus Act.
“Although this bill was far from perfect, I supported it because it provided additional funding to Medicaid to help local and state health systems respond to the coronavirus outbreak, increases access to telemedicine services for new Medicare beneficiaries and provides free coronavirus testing for everyone who needs a test,” Allen said of that legislation.