Federal Government, Senator, Senator Marco Rubio discussed on The Small Business Radio Show
A lot of small businesses are taking the brunt of this economic shutdown. They're laying people off by the hundreds of thousands in some cases. They're losing their life savings with businesses close but the federal government passed a two trillion dollar assistance program last week with billions allocate to small business. Here talk about the programs that the federal government has to help. Small businesses is Senator Marco Rubio from Florida. Who's the chairman of the Committee on Small Business Entrepreneurship? First of all senator. Thanks for joining our show. And how were you and your family during the during this crisis well thank you and we're doing fine wherever once in working from home and trying to get the word out as much as we can. Thank you for having me on the show but now everyone listening this well and following all the experts I hope so well. Mo- small business owners as you know are really suffering and they think this two trillion dollar package is a good start but there's a lot of confusion out there as we're small. Businesses should really start. Where do you think they really should begin in getting assistance? If they're looking for their small business well I gotTa tell you theoretically and ideally. He's entry points to this program and that is a bank that you already have a relationship with explain to works Small business that qualifies meaning you. May you either meet the SBA guidelines for small business or you have five hundred employees or less. It's not it's either or You go to a lender that lender able to forward to you a grant and the amount of two hundred and fifty percent of your monthly payroll Before the crisis and before you were forced to close down or before everything started closing down and as long as you spend that money on payroll benefits rent or utilities. Those as long as you spend it on a combination of those things. You won't have to pay any of it back if you decide to spend it on for a different purpose it turns a year from now it turns. It doesn't become a loan. It's all a year from now a year. From now and the books closed it turns into a one percent loan I say the ideal place to go is the bank. You already have a relationship rates. Because they've are when. They opened the account. Are they already confirmed? Your Business Status already confirmed that you're a real business with a real employment identification number and so forth and And they can they. Also if if you're operating accounts with them I have great insight into your payroll and what it is. You pay people. What it is you spend on that expense so that that I think is going to be the fastest way for most people all over eight hundred banks. That are preapproved to start immediately and And so hopefully people are already in that process that started yesterday on on Friday yesterday and so we we are. We hope that that process will will accelerate here and the banks will do everything possible to save their clients. Business will the application I looked at seems really Senate simple senator. It seems like you just gotTa Fill your name in your tax. Id Number what your payroll is what you need the money. Do you think banks are going to be asking for a typical information like tax returns and personal financial statements? Now there's no reason to an effective. They're not supposed to. Because there's the there's the banks have no skin in the game none. They're being paid a fee a five percent Too Long three fifty and then it scales down the way to one percents of the larger ones. They're being paid a fee basically process paper because it's one hundred percent guarantee by the federal government There is a They have a guaranteed buyer. If they decide they don't WanNa hold her. It will turn into a loan. And they don't want to hold it so they're really. They're the liability. If mislead on on your form so bottom line the banks are basically just being used as a distribution point and being paid a fee to do it by the government so that there is no credit check. There is no underwriting. There is none of the things that come on because this is not designed to be alone in fact the only reason why there's a long-term vision on the back end of it is because we wanna make sure that as much money as possible is being spent on payroll. That's why it's called a payroll protection paycheck protection program manager standing. Is that seventy five percent to be spent on payroll right. Yeah theoretically obviously people could spend more but we want them to at least maintain the payroll possible now. Look there may be some instances in which you can't do that right. You can't find people to work. You're in an owner or people even if you're even if you ask them not to work you can't even find people put on payroll go out and find. The perfect strangers never worked before and put him on payroll and that's why there are provisions in this on the back end. Mitigation so as an example. Say That you look in the middle of this crisis. Tried to hire boys but you can only get six of them back. The other four were gone. And you're not going to go out and pay some four strangers at our works for you before a paycheck and you don't even know if they're good and but Four months five months later when things got back to normal you went ahead and hired for more people. you'll be able to at the end. Show that and say look. We tried to hire people. We couldn't find good. We hire most of them back but not all of them and there's an opportunity to for them to basically Sarah. What will will forgive that because we understand you made real good efforts and so there's a provision in the bill for that as well cinema this principle really good point because a lot of small business owners are asking what happens if I've already closed my business down you know. I run a SPA. I run a bowling alley. Can I still get this loan forgiving? If I back later it seems like you can you can and you can. Also by the way. Go back to the people you laid off and say look after two weeks. I'd like to pay you for the two weeks that I laid you off or I'd like to hire you and pay you on to have you on board so that one would restart the you're here. And essence what we think. Many small businesses would love to be able to pay their employees if they had the money in the bank. They don't want to their employees. Go but they just don't have the cash it depends on the industry. There are a lot of people out there for example that might run a restaurant where you're allowed to run takeout that you're not allowed to have in dining well you can't really keep your the revenues for takeout don't make sense to justify a full payroll But now with this place you might be able to bring some people back and pay them their salaries that you're paying them before and there's also by the way unrelated to the paycheck protection program but complementary to it. There's a new tax credit right that you will receive at the end of the year For whatever money you spend on payroll so so. There's another incentive as well so when things get back to normal so we've tried to create them any incentives as possible because it's good for the worker but frankly it's also good for the small business. It's going to be tough for a small business to shut down. Imagine the say a restaurant again and all of a sudden you have to go out and hire a bunch of new. People that you've never worked with before that you have to train from scratch that there's a startup impediment there could could prohibit you from starting really prohibit a lot of people from starting so so we wanted to address that as well. So how soon do you hope that the money will start flowing to small businesses? Once they've applied to the bank will frankly theoretically okay now. Every banks can have different procedures but theoretically it should be able to flow immediately in essence. Let's say that I'm a small business. Ten employees and I have an account with the small business division of a local bank or one of the national banks. They've already confirmed an employer. Domin employer day already. Did all that due diligence? Today they open my account. They already know what my payroll is. I may even be using the services they provide. There are two bunch of these banks provide payroll services for small businesses so for them. The confirmation is instant and by the way if the banks get wrong. They're going to be held liable their health. Harmless to that so really. There's no reason why they couldn't. Immediately disperse those funds into that account. Now I can't speak for every bank with every banks gonNA follow that procedure. You know what? I'm increasingly comfortable with. Is that the banks particularly the bigger national ones but a lot of the community ones are going to take care of their customers. Their depositors What I'm more concerned about our what happens to the people in the small businesses that either have a banking relationship with the bank that That that doesn't participate and that's why does the practice of bringing additional banks into the mix and what happens to those small businesses and independent contractors to who are covered by this ten ninety nine poise? Who may not have a regular banking arrangement? There are people that don't use the banking system from the way. They conduct their business. So you know that remains to be seen but That's the ones I'm more concerned about. And that's why we're trying to a treasury. Is doing everything possible to create an alternative ramp for additional financial services to to to be a part of a rebuild? If you are a sole proprietor or your independent contractor in your part of the GIG ECONOMY. Can you still take advantage of this program? Correct and they they they will begin. Applications for sole proprietors will begin April tenth Which is I guess six days from now and And the rationale for that is They need to create. There's we've never done that before. So they need to create a new set of forms and guidelines for how we're going to verify for in those situations but the goal here is wallace to understand the nature of our economy. You know the guy that cleans your pool the guys do your landscaping people who drive a newborn car. These folks is kind of a new dynamic in our economy that has really taken off in the last decade. And so it's going to take just a little bit more work to sort of create the parameters that now that doesn't mean so proprietor. You know there are sole proprietors who are escorts employees Things of that nature they would be treated as a that that they would. They would be treated at the business concern. We're talking about people that work on ten ninety nine basis you know and and may not necessarily be incorporated in any way But work for themselves and can show some record of it. And that's what they're creating so that. That will begin to six days from now of Friday April tenth. Now my understanding is that is part of your payroll people that get paid over one hundred thousand dollars. Don't qualify the first one hundred thousand dollars to do so only up to one hundred the first hundred the first one hundred thousand dollars if you have an employee that makes one hundred fifty you you can pay up to the appropriate but you can pay him. What what you want say theoretically but calculate what your monthly payroll is at salaries over one hundred thousand dollars. They will only take the first hundred thousand dollars into account when determining your eligibility amount so I asked listeners of the program to send in questions because they knew it was going to interview so I got a couple of questions I want to ask. You one comes from Chris Keith. He said that with almost ten million Americans filing unemployment last couple of weeks. Do you foresee US doing something? Like Canada did with covering more costs or France with a steady stream payments to Americans or American business owners. Well I think that that really is a would have to be part of a whatever we're going to do to recover from this and as I tell people and we have some experience with this unfortunate because a natural disasters hurricanes one of the keys is the first phase in all of this is the is the The acute phase..