Sen. Marco Rubio (R., Fla.) spearheaded one of the most expensive business-rescue frameworks in history.
Photo: Greg Nash/Associated PressWASHINGTON—As the coronavirus pandemic began shutting down the U.S. economy in March, Sen. Marco Rubio (R., Fla.) spearheaded legislation creating the $670 billion Paycheck Protection Program, one of the most expensive business-rescue frameworks in history.
Mr. Rubio, who is chairman of the Senate’s Committee on Small Business and Entrepreneurship, now faces the challenge of steering more resources to millions of already ravaged companies so they can survive the next few months.
In an interview with The Wall Street Journal, Mr. Rubio discussed the small-business relief package that he and Sen. Susan Collins (R., Maine) proposed July 27 that is now being negotiated with Senate Democrats.
The proposal includes $190 billion for a revamped PPP and creating a $100 billion program to provide long-term, low-cost loans to certain struggling businesses including those located in low-income areas.
Here are lightly edited excerpts of the conversation:
WSJ: What is the main goal for the coming small-business relief package?
Mr. Rubio: We have to build a bridge between where we are today and over the next few months. Part of it is helping these viable small businesses survive so they can be in a position to reinvent themselves when things begin to go back to a new normal.
WSJ: The proposal includes a new $100 billion program to extend long-term, low-cost loans to struggling companies under the Small Business Administration 7(a) program. Tell us more.
Mr. Rubio: It’s targeted at two things: At seasonal businesses who may have had their entire season wiped out, and at small businesses located in opportunity zones or other low-income census tracts.
Research shows that independently owned small businesses in minority communities and in low-income communities generally have less than two weeks of cash on hand. The biggest concern is that we would have an uneven recovery; that some of these essential businesses, many that are in the service sector, would be the victims of an uneven recovery that would further exacerbate inequalities that we have in our country, inequality of opportunity.
WSJ: Both the new round of PPP and the 7(a) loan program limit their eligibility to businesses that can demonstrate a 50% reduction in their revenue. Critics say that is too restrictive.
Mr. Rubio: We’re willing to listen to input about that. This is all new to all of us, and by no means are we going to get this 100% perfect. But we don’t have the luxury of years to flesh this out because if we don’t, what I think you’ll see is a surge in unemployment. [Early PPP borrowers] are beginning to, or saying, they will lay off their workers. So the bottom line is if we don’t deal with it through PPP, we’re going to have to deal with it through the unemployment-insurance system.
WSJ: Where do the negotiations with the Democrats stand?
Mr. Rubio: There are still some items to be worked out, but in general we’re certainly closer on PPP than we are, perhaps, on any other aspect of the overall situation (for the stimulus package).
[An aide to Sen. Ben Cardin of Maryland, the committee’s top Democrat, concurred that the two parties are in agreement on many PPP measures.]
WSJ: Critics say PPP should have been a simple grant program similar to those used in Europe, rather than a loan program. If you were to do it all over again, would you consider designing it as a grant program?
Mr. Rubio: No. Because it is a grant program as long as you keep your workers on payroll. And it’s the fear of it becoming a loan that acts as an incentive to bring people back to work. We wanted to keep people employed. That’s why we designed it that way, and that’s what I think made it successful.
WSJ: What are your plans for helping businesses in underserved communities?
Mr. Rubio: We set aside $25 billion specifically for small businesses with 10 employees or less [in PPP], and a large percentage of small businesses owned by minorities would fit in that category. We set aside $10 billion to guarantee loans through Community Development Financial Institutions that specialize in lending to communities that haven’t traditionally found traditional banks to be helpful.
One of the largest impediments we’ve learned about is financial know-how: knowing that these loans are available; knowing where to go get them; knowing what it takes to comply with the forgiveness standards; some of the financial-literacy support that small businesses would need.
WSJ: What’s the long-term solutions for strengthening the SBA itself?
Mr. Rubio: The SBA is due for reform and modernization. Our nation needs to rebuild its industrial capacity. This is going to be even more important after the pandemic, as I predict you’ll see a lot of industrial nationalism.
SHARE YOUR THOUGHTS
What changes would you like to see made to the Small Business Administration? Join the conversation below.
We have strategic industries that we need to be protective of, and strongly reinvest in the innovation business once again. The SBA needs to be reformed to meet that at the small-business side. After the pandemic, there are a number of industries that will have to be creative about how to reinvent themselves. There are some consumer behaviors that are probably going to become a permanent feature of how we conduct commerce.
So businesses may have to reinvent how they do business, and the SBA potentially could be helpful in that regard as well.
Write to Yuka Hayashi at yuka.hayashi@wsj.com
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