%1

A bipartisan group of senators yesterday unveiled plans to offer more emergency pandemic relief to the country's tiniest employers, a last-minute revamp of Washington's nearly $1 trillion small business rescue that is close to exhausting its funding, Politico reported. The bill introduced by Senate Small Business Chair Ben Cardin (D-Md.) would allow thousands of self-employed Americans to qualify for more aid under the massive Paycheck Protection Program, which offers government-backed loans that can be forgiven if businesses maintain payroll. Cardin and the bill's co-sponsors — including Sens. James Lankford (R-Okla.) and Susan Collins (R-Maine) — face a narrow window to pass the legislation because PPP funding is expected to run out in the coming weeks. Their bill would not appropriate additional money. As of last week, the program had $44 billion to lend out of the nearly $292 billion made available by Congress since December. It's unclear how many potential borrowers the bill will help without any more money being pumped into the program. And the legislation doesn't extend the May 31 deadline for loan applications either.

The supply-chain disruptions rippling across the business world are taking a heavy toll on small U.S. companies, which have fewer resources to absorb or push back on price increases and less leverage to pass along the higher costs to customers, the Wall Street Journal reported. Forty-four percent of small businesses reported temporary shortages or other supply-chain problems in March, according to a survey of roughly 800 companies by Vistage Worldwide Inc., a business advisory firm. A U.S. Census Bureau survey of small businesses, completed in early April, found supply-chain disruptions in wholesale trade, manufacturing and construction, among others. Multiple forces are driving supply-chain woes, from coronavirus infections among employees and temporary business closures to increased demand as vaccines take hold and restrictions ease. A backlog at California ports, the temporary closure of the Suez Canal and weather-related problems have created additional challenges. Smaller companies typically have less sophisticated purchasing departments than larger corporations. Read more. (Subscription required.) 

Explore the many issues that arise when suppliers are unable to make deliveries of promised parts due to financial problems with ABI's Interrupted! Understanding Bankruptcy's Effects on Manufacturing Supply Chains.

The federal government is preparing to open two new industry-specific small-business relief programs, one of them months in the works, as its signature pandemic aid effort, the Paycheck Protection Program, nears its end, the New York Times reported. The Small Business Administration said it hopes to start taking applications by the end of this week for a $16 billion grant fund for live-event businesses like theaters and music clubs. The program, the Shuttered Venue Operators Grant, was supposed to begin nearly two weeks ago, but its application system malfunctioned and collapsed, stymieing thousands of desperate businesses that have been waiting months for the promised aid. On Saturday, the agency posted additional details on its forthcoming Restaurant Revitalization Fund, a $28.6 billion support program for bars, restaurants and food trucks whose sales were devastated by the shutdowns that states imposed in response to the pandemic. The fund was created as part of last month’s $1.9 trillion economic support package. Within the next two weeks, it will begin a seven-day test intended to help the agency avoid the kind of technical fiasco that plagued the venue program. The agency has not announced a specific start date for either grant program. “Help is here,” Isabella Casillas Guzman, the agency’s administrator, said of the restaurant program. “We’re rolling out this program to make sure that these businesses can meet payroll, purchase supplies and get what they need in place to transition to today’s Covid-restricted marketplace.” Both programs offer recipients grants of up to $10 million to replace a portion of their lost sales. But both programs — which will distribute money on a first-come-first-served basis, subject to some priority rules — are expected to run out of money quickly. The money in the restaurant fund, in particular, falls far short of its needs, agency officials have acknowledged. “Everyone should apply on Day 1,” Patrick Kelley, the head of the agency’s Office of Capital Access, told attendees at a webinar last week organized by the Independent Restaurant Coalition. Lawmakers projected at least $120 billion in demand for the restaurant fund, Mr. Kelley said, but provided money for less than a quarter of that amount. The law creating the restaurant fund required a 21-day exclusive period for businesses that are majority-owned by women, veterans or socially disadvantaged individuals. The S.B.A. said that group includes those who are Black and Hispanic, as well as Native Americans, Asian-Pacific Americans and South Asian Americans.

COVID-19 is hitting business owned by Asian Americans on multiple fronts, Reuters reported. Pandemic related closures and restrictions on indoor gatherings were particularly hard on the restaurants, stores, nail salons and other service industries in which many Asian-owned firms are concentrated. Language barriers and a dearth of banking relationships made it difficult for some business owners to access government aid, even as they coped with an added layer of fear amid a surge in hate crimes linked to racist rhetoric that blames Asians for the coronavirus. According to a report here released last month by the New York Federal Reserve and AARP that focused on older entrepreneurs who make up 80% of all small business owners, small firms owned by Asian Americans fared worse than those owned by Black Americans and Hispanic Americans — despite going into the pandemic in a stronger economic position. Some 9% of firms owned by Asian Americans were financially “distressed” in 2019 — far lower than the 19% of Black owned firms and 16% of Hispanic owned businesses given that rating based on their profitability, credit score, and business funding, according to New York Fed research. Among white-owned firms, the figure was 6%.

In March, small-business owners felt the most optimistic since the onset of the coronavirus pandemic more than a year ago, a new survey shows, but they are still being very cautious about future plans, MarketWatch.com reported. The closely followed optimism index compiled by the National Federation of Independent Business climbed to a pandemic high of 98.2 last month from 95.8 in February. That’s roughly in line with the survey’s historic average The index is still well below pre-pandemic levels, however. The index stood near an all-time high of 104.5 in February 2020, just a month before the pandemic erupted. mall businesses have been helped by the lifting of state restrictions this year after a sharp decline in coronavirus cases. Sales have improved and many companies are trying to hire. One of their biggest problems is finding suitable workers, a seeming oddity given a huge drop in employment during the pandemic. More than 8 million people who held jobs last year are no longer working. A record 42% of small businesses surveyed said they could not fill open jobs. Small businesses say generous government unemployment benefits are keeping some workers from applying for jobs, but labor shortages go back at least several years.

The Small Business Administration on April 8 issued a procedural notice to lenders regarding the extension of the Paycheck Protection Program, according to the ABA Banking Journal. Pursuant to the PPP Extension Act of 2021, SBA said that it would shut down its PPP platform to new PPP loan guaranty applications at 12 a.m. EDT on June 1. SBA will then have an additional month to process any pending applications, before shutting down processing on 12 a.m. EDT on July 1. The SBA last week also issued an update to its frequently asked questions on the PPP. The new answer provides clarity regarding when an applicant or owner is no longer considered to be “presently involved in any bankruptcy” for PPP loan eligibility purposes. Chapter 7 bankruptcy filers will no longer be considered “presently involved in any bankruptcy,” after the bankruptcy court enters a discharge order in the case. For chapter 11, 12, or 13 bankruptcy filers, the bankruptcy court must enter an order confirming the plan in the case. For any type of bankruptcy, if the bankruptcy court has entered an order dismissing the case, applicants or owners will no longer be considered “presently involved in any bankruptcy” for purposes of the PPP. SBA noted that “the discharge order, the order confirming the plan or the order of dismissal, whichever is applicable, must be entered before the date of the PPP loan application.” Click here to read SBA's Procedural Notice.

Small business closures across the U.S. and the world are creeping back toward their pandemic peaks, according to a report from Facebook and the Small Business Roundtable, CNBC.com reported. “It continues to be a very painful time for small businesses,” John Stanford, co-executive director of the Small Business Roundtable, told CNBC’s “Worldwide Exchange” on Thursday. The report, which surveyed over 35,000 small and medium-size businesses across the world, found that 22% of U.S. small businesses were closed in February. Those figures were up from October’s 14%. At the peak in May, the pandemic saw 23% of small and medium-size businesses closed — only 1 percentage point higher than the current closure rate. While the overall closures are nearing Covid highs, the report found that different areas of the country were experiencing varying degrees of difficulty. Some states, like Maine, Idaho and Colorado, were seeing 9%-10% closures, while others like New York, Pennsylvania, and Massachusetts were seeing at least 30% closed. Within states, the report also found that certain demographics were getting hit harder than others: 27% of minority-led small and medium-size businesses reported closures, compared with 18% of others. Female-led businesses saw 25% closure rates, while 20% of male-led businesses closed.