At its Monday, April 13 regular meeting, the board of Archuleta County’s only District-authorized charter school — Pagosa Peak Open School — authorized its school staff to apply for grant funding through the ‘Paycheck Protection Program’ (PPP), administered by the federal Small Business Administration (SBA). This program was created as part of the CARES Act, the federal ‘stimulus’ package that injected (or will inject, soon) $2.2 trillion in freshly printed dollars into the American economy.
Pagosa Peak Open School is legally a government-assisted non-profit corporation, and the CARES Act allows non-profits to apply for PPP funds in order to mitigate financial stress caused by the novel coronavirus — or, more accurately, to mitigate the financial stress caused by government health measures that have shuttered large parts of the American economy. If the PPP funds are used mainly to pay employee salaries over the next couple of months, the loan can be forgiven and will thus act like a government ‘grant.’
The SBA was allotted $349 billion to assist struggling small businesses in keeping their employees on payroll. (The banks that process the two-page loan applications will be entitled to $10 billion in “service fees.”)
The ‘Paycheck Protection Program’ was one part of the ‘stimulating’ CARES Act — the “Coronavirus Aid, Relief and Economic Security Act”. Media coverage of this law has typically focused on the one-time cash payment of $1,200 to American taxpayers, the ‘enhanced’ unemployment benefits, and the PPP — new programs hastily cobbled together by Congress to respond to a quickly-unfolding economic crisis. None of the programs in the CARES Act seem to have been implemented with the speed that Congress intended, however; the federal government has struggled to disperse the intended funds to the parties hurting most from one of the worst economic crises in US history.
Terri House, editor of the weekly Pagosa Springs SUN, wrote an editorial yesterday about her campaign to keep Pagosa’s local newspaper solvent during a time when advertising revenue — the lifeblood of a print newspaper — has fallen off due to closed businesses and ‘Shelter at Home’ orders. She described the convenient online PPP application process.
…Yes, we applied while wearing our pajamas and slippers. There was no need to even put on shoes or drive to town. This was one of the easiest loan applications we’ve ever filled out…
…Do you happen to know someone in Archuleta County who owns a small business with fewer than 500 employees? Encourage them to look into the PPP. Even nonprofits can apply…
…The PPP loan didn’t fix all of The SUN’s financial problems caused by the pandemic. Like many businesses, our newspaper was dealt a financial blow. A nonprofit working to help keep newspapers running during the pandemic has set up an online donation site and some faithful readers even made donations before they could get a tax deduction for it. We also found a grant we are applying for this week…
Unfortunately, Ms. House’s advice to “look into the PPP” may have come too late. On Wednesday evening, April 15, the Small Business Administration and Treasury Department announced that funding for Paycheck Protection Program loans had been depleted. As of yesterday, April 16, SBA is no longer processing PPP loans due to reaching their statutorily-allowed lending cap. The National Small Business Association is calling on Congress to quickly appropriate more funds to SBA’s lending programs.
We mentioned the $1,200 stimulus checks going out to most individuals who filed a 2018 or 2019 income tax return, and to Social Security recipients. (I understand there’s a mechanism for applying, even if you’re not getting Social Security and you didn’t file a recent tax return.) This payment is ‘free money’ — unlike the PPP and other programs, there’s no obligation to use it for any particular purpose. (A local couple wrote us with a suggestion for those who don’t really need an extra $1,200. You can read about that suggestion here.)
Here in Archuleta County, a large segment of the community consists of retirees with comfortable 20th century pensions, but working families and individuals, and business owners, are often hanging on by their financial finger nails. For many of those working folks — especially those working in our hospitality industry — staying on their employers PPP-funded payroll at $12 an hour might be a poor financial choice. A better outcome might result from collecting the CARES Act ‘enhanced’ unemployment payments — an added $600 per week, authorized by the CARES Act, on top of the ‘normal’ unemployment payment. These enhanced payments are in effect through the end of 2020.
About 117,000 Colorado workers applied for unemployment during the month of March. (Colorado Department of Labor numbers are not yet available for April.) The three industries hardest hit? The hospitality industry, retail, and health care & social assistance.
It’s not clear to me, as a casual observer, if these trillions of dollars — freshly minted out of thin air by the Federal Reserve? — are intended to be a “loan” to the people of the United States — something that we will ultimately need to repay? No one seems to be talking about that aspect of the CARES Act. Certainly, the folks in Washington DC who approved the stimulus package have been careful not to mention the little problem of paying off an accrued debt.
We understand that the 2009 American Recovery and Reinvestment Act ‘stimulus funds’ that mainly bailed out huge financial institutions “too big to fail” has still not been repaid. It was simply stacked on top of all the other money the Federal Reserve has pulled out of thin air over the past 60 years, and then made the American taxpayers responsible for paying the principal and interest on. (Maybe we don’t have to worry about that, because our kids and grandkids will take care of it for us?)
By the way: The IRS will never call, text, email or reach out to consumer via social media to say it needs more information to process a payment. The same goes for banks and credit unions. Experts say those financial institutions won’t contact customers asking for sensitive banking information — because they already have it.