US Senators Marco Rubio and Ben Cardin

Context and Urgency

• Hosted by Goldman Sachs Chairman and CEO David Solomon on March 30, 2020, featuring Senators Marco Rubio (Chairman) and Ben Cardin (Ranking Member) of the Senate Small Business Committee.
• Survey of 1,500 small businesses revealed 96% were already impacted by COVID-19.
• 51% of respondents indicated they could only operate for zero to three months under current conditions; this figure rises to 83% when projecting a six-month horizon.
• 75% of surveyed businesses reported feeling they have little or no voice in the policymaking process.
• The participating "10,000 Small Businesses" community averages 10 employees and $724,000 in revenue, with 44% being family-owned.

CARES Act Small Business Provisions

• Eligibility: Any U.S. small business meeting SBA criteria or having 500 employees or fewer qualifies; this includes 501(c)(3) organizations and gig economy/1099 workers.
• Paycheck Protection Program (PPP):
  • Lenders (existing 7A lenders) can offer a lump sum of up to 250% of average monthly payroll costs.
  • Funds are forgivable if used for payroll, benefits, rent, lease, or utilities over an eight-week period; otherwise, the remaining balance converts to a low-interest loan.
  • The program operates without underwriting, credit checks, or personal guarantees, backed by a 100% federal guarantee.
  • Incentives are included for loans up to $350,000 to encourage participation from smaller lenders.
• Emergency Economic Injury Disaster Loans (EIDL) & Grants:
  • SBA provides an advance cash grant of up to $10,000 with no repayment requirement, expected to be disbursed within three days.
  • The grant amount is subtracted from the total forgiveness under the PPP if both are utilized.
  • Existing 7A and 504 loans issued within six months qualify for a six-month payment deferral.
• IRS Retention Credit:
  • Offers a credit of 50% of payroll (up to $10,000 total, or $5,000 max credit) for businesses with a 50% revenue reduction.
  • Businesses with over 100 employees can only claim this for employees who were furloughed; those under 100 can claim for all employees.
  • Participation in this credit is mutually exclusive with the PPP loan forgiveness program.

Implementation and Lender Participation

• Over 800 existing 7A lenders are authorized to originate loans immediately without prior SBA permission.
• Treasury and SBA are expected to issue further rules within days to facilitate new lender participation.
• The goal for loan processing is a rapid turnaround, ideally within 24 to 36 hours for businesses with existing banking relationships and payroll data on file.
• Application processes are streamlined and largely self-certification-based, with most documentation handled online.
• Senators warned against "scam artists" and fake websites, urging businesses to verify resources through official channels like the SBA or Small Business Development Centers.

Interactions and Future Outlook

• Dual Benefits: Businesses may apply for both state and federal aid, and hold multiple loan instruments (e.g., EIDL and PPP), provided funds are not used to pay the same expenses twice.
• Tax Implications: PPP forgiveness amounts and grants are explicitly non-taxable for the recipient.
• Individual Stimulus: The broader bill includes direct payments of $1,200 per adult ($2,400 for couples) and $500 per child, phased out for individuals earning over $75,000 and couples over $150,000.
• Legislative Continuity: Both Senators anticipate the need for additional legislation if the crisis extends beyond the current 60-90 day window, with the mechanism designed to allow rapid funding replenishment.
• Supply Chain Shifts: Senator Rubio predicts a potential long-term shift in geopolitical and domestic economic infrastructure, specifically regarding the domestic production of critical medical supplies and supply chain resilience.

Next Steps and Resources

• Senators requested feedback from business owners on the efficacy of payroll retention measures versus unemployment insurance.
• Goldman Sachs directed participants to the "10,000 Small Businesses" app and a new resource center on gs.com for updated advice and webinars.
• Small Business Development Centers (SBDCs) are being utilized to consolidate information and assist with application coordination.