The Paycheck Protection Program is the largest federal fiscal policy program to be passed in recent history. It was also the most effective aid program passed by Congress.
We know this not only from the overwhelming anecdotal evidence from small business owners, but also from the actual data that will be available shortly in a report from the Senate Small Business Committee.
The program was passed nine months ago and offered small businesses and their employees a chance to survive the coronavirus pandemic.
I've heard firsthand from small business owners across the country who said the PPP was a life raft to navigate the turbulent waters of the pandemic.
This is also evident from the statistics.
In May, economists expected the economy to lose more than 8.3 million jobs and unemployment to hit levels unseen since the Great Depression. Instead, our economy created a record 2.5 million jobs with more than $ 500 billion in PPP loans granted to small businesses across the country in April and May – all amid a pandemic.
Small and medium-sized enterprises are of unique importance to the American economy and account for a significantly higher proportion of gross domestic product and employees than other OECD countries. In fact, the GDP that our small and medium-sized enterprises generate roughly corresponds to the entire economy of countries like Saudi Arabia and Switzerland.
In the United States, the PPP helped support up to 55 million jobs, including up to 4.5 million in manufacturing, with an average company size of just 20 employees. Even before the pandemic, manufacturing had a growing skill gap. The inability to retain skilled workers during the downturn would have exacerbated this void and further deteriorated the US's global competitiveness.
The PPP acted as an emergency brake in the event of a further decline. Despite cynical attacks, the benefits of the program have been of great importance to companies in all industries and corners of our country. And while many media outlets and cynical politicians have tried to allege massive fraud, the evidence seems to indicate otherwise.
As the House Select Committee chairman on the coronavirus crisis, Jim Clyburn, a Democrat, noted in September, the 0.76% PPP fraud rate is actually lower than estimates for the private mortgage market and other CARES Act programs.
And thanks to the work of mission-driven lenders and financial institutions for community development, minority small businesses in particular, which have long been among the hardest hit by exogenous shocks, have benefited. Black and Spanish firms account for 7.8% of all small businesses in America, but they received 10.6% of the total PPP loans distributed, making 10% of the total jobs received.
Until March, the government had no mechanism to support these small businesses – many of the staples of their communities – other than telling them to lay off workers who would then be required to take out unemployment insurance, or possibly instruct them to apply for credit only to increase their debt burden when revenues collapse.
Given the unprecedented challenge, these options were not acceptable. American ideals of innovation, productivity, community, and ownership are too great to be sacrificed.
From manufacturing and construction to retail and food services, the PPP provided a lifeline for the hardest hit small businesses and their employees, laying the foundation for future growth. Before PPP expired, we saw reasons to be hopeful.
"It speaks volumes … that one of the most pressing criticisms of the PPP was that companies were only allowed one loan," economist Doug Holtz-Eakin will testify before my committee. "How significant can any other criticism of the PPP be if its biggest mistake is preventing companies from accessing it again?"
As we enter the second wave of public health lockdowns, we need to allow these small businesses to take out an additional PPP loan. My proposal for a second round would give them and their staff much-needed security during the winter and, for those who have not yet been shut down for the Democrats' foothold, the opportunity to keep their doors open.
Senator Marco Rubio, R-Fla., Is the author of the Paycheck Protection Program and Chairman of the Senate Committee on Small Business and Entrepreneurship