That’s the phrase one of the region’s bank presidents used in a recent interview with BusinessWest to describe funds contained within the Paycheck Protection Program (PPP) being administered by the U.S. Small Business Administration.
He’s not entirely accurate with that choice of words — these loans are forgivable only if the companies receiving them keep everyone on the payroll for the prescribed period. But ‘free money’ is essentially what this is, if those requirements are met.
And the lure of free money is obviously quite strong, because interest in this program is off the charts. And as news starts to leak out about some of the large, national companies that are receiving this free money, it’s clear to us, and most everyone else, that some of it — and, unfortunately, a large portion of it — is not going to the desperate small businesses that need it most.
Hedge funds, national restaurant chains like Ruth’s Chris Steak House and J. Alexander’s, and a host of other large, public companies have all received several million dollars from the $369 billion fund, which was totally depleted less than two weeks after the program was officially launched. Meanwhile, Harvard University, with its $40 billion endowment, received nearly $9 million in aid from the federal government through the CARES Act — specifically, a $14 billion fund to support higher-education institutions during the pandemic. More ‘free money.’
Actually, Harvard received less than some other either Ivy League schools — Columbia and Cornell each got almost $13 million.
Whatever those numbers are, they represent poor allocation of money that is desperately needed to keep smaller businesses afloat during these ultra-challenging times. Harvard could certainly use $9 million, but it doesn’t need $9 million — not nearly as much as hundreds of struggling small colleges across the country do.
Ruth’s Chris Steak House could certainly use the $20 million it received, but it doesn’t need it to survive like the myriad small restaurants pushed to the brink of collapse need it.
Before we go any further, we’ll acknowledge that big companies have just as much right to apply for, and receive, stimulus money as the small ones do. They’re not breaking any laws by doing so. And we understand that a job saved is a job saved, whether that job was provided by a national taco chain or the corner pizza joint.
But the reality is, with a great many small businesses across this country, when it comes to the pandemic, we’re not talking about a bad quarter or a bad year — we’re talking about survival.
And while it wasn’t written into the legislation that created the Paycheck Protection Program and other forms of relief, enabling threatened companies to survive was, or should have been, the intent.
Moving forward, it should be. Many more relief measures will be passed in the months to come, and with these, Congress should be more diligent about who is eligible and who is actually awarded funds.
Meanwhile, we encourage those larger businesses to follow the lead of Shake Shack, the giant chain that was awarded PPP money and then gave it back amid the outcry from smaller businesses left high and dry.
“As we watched this opportunity play out over the weeks, it was very clear that the program was underfunded and wasn’t set up for everyone to win,” Shake Shack CEO and Chairman Danny Meyer said of his decision. “By returning our $10 million, that $10 million can go back into the pot and go to the people that deserve it.”
He’s right about that, and by ‘deserve,’ he means the hardworking small-business owners who simply don’t have the resources to weather this storm.
These are the people who deserve this ‘free money,’ and we’re hoping that, from this point forward, more of them wind up getting it.