Will A 2nd Round Of Cash Be The Cure For Small Businesses?
SCOTT SIMON, HOST:
More money from Congress this week to deal with the damage the coronavirus continues to inflict on the U.S. economy. The latest package includes $75 billion for hospitals and health care providers, 25 billion to fund more testing for the virus and $321 billion for businesses that, well, can't do business right now. To talk about that last part, we're joined now by Bloomberg Opinion columnist Joe Nocera. Joe, thanks so much for being with us.
JOE NOCERA: Thanks for having me, Scott.
SIMON: That 321 billion for the Paycheck Protection Program, PPP, ran out almost immediately. You were critical of the rollout. What do you think of the supplement?
NOCERA: Well, it's going to have the same set of problems, which is it's first come, first served. So it's not based on need. The good thing about it is that the larger companies that got in on the first round, and some of whom are giving their money back, like Shake Shack, are not going to be involved this time. So it really will be smaller companies. But it is not nearly enough. And many of the companies, especially the really small ones, they don't really have the savvy and the knowledge and maybe even the information to submit the application in a proper way. They need a lot of help. And the banks are overwhelmed, so, you know, it's just - it is a chaotic situation where the first people in the door are getting the money and everybody else is left on the sideline, which hardly seems like the way to save the economy.
SIMON: What could or should be done?
NOCERA: Well, I think there's a couple of things they should do. First of all, they should figure out a way to base it more on need. Second of all, they should do it by the size of a company. And third of all, there should be a window before they start passing the money out so that, for instance, if you're the corner pizza joint and you've never done anything like this, you can go to your local small bank, you can have some time to fill out the application and you can get in the queue with a reasonable chance of getting some money. The other thing you could do is just put a whole lot more money into this, forget the banks, just give it directly to the businesses and cut out the middleman.
SIMON: Why do politicians shy away from that?
NOCERA: They just get nervous that the wrong people are going to get it or that it's going to cost too much. And they'd rather be a guarantor of bank loans than simply handing out money to either people or to businesses. If you look at a place like Germany or New Zealand or many other countries, the way they're dealing with this is not by giving money to businesses. They're just giving monthly checks to people.
SIMON: There's been a lot of focus on restaurants for the role they play in the community and in the economy, certainly. You've been talking to a lot of people who run restaurants. What's going through their minds now?
NOCERA: They're terrified. They really are terrified. The PPP doesn't really work for them because they don't have any employees, basically, at this point. If you have only half the seats filled, the economics don't work. You have to double or triple the cost of the meal. I mean, think about your local neighborhood restaurant that has a bar where everybody, you know, sits at the bar and talks to each other. You're not going to be able to do that anymore until there's a vaccine. I talked to one person who runs a very reputable high-end restaurant in New York who basically said he thought 50% of the restaurants in New York would close, and the same thing would be true of most major cities.
SIMON: That is a huge loss.
NOCERA: It's incredible. People are going to be scared to come into restaurants when they are - when they're first allowed to open up. And then - so then there's the worry about once you open and you have cooks back and have waiters back and so on, will that cause you to collapse because you don't have anybody coming in?
SIMON: Joe Nocera, columnist for Bloomberg Opinion, thanks so much.
NOCERA: Thanks for having me, Scott.
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