The federal government’s roll-out of the Payroll Protection Program had a rocky start, with many larger corporations appearing to have benefitted from the assistance at the expense of the smaller businesses that the program was designed to assist. Recent articles in the New York Times and from the Brookings Institution spotlight how other nations focused more on supporting businesses, with fewer individual pay-outs via unemployment claims.
“The PPP idea is simple,” Joshua Gotbaum wrote on the Brookings Institution website May 4: “rather than have businesses lay off tens of millions of people until the Covid-19 shutdowns are over and customers come back, the federal government will pay businesses to keep them on payroll for a couple of months whether they work or not.” Gotbaum added, “The alternative is worse: joblessness, hopelessness—and governments paying hundreds of billions of dollars in unemployment benefits anyway.”
The New York Times reported May 20, “Much of the rest of the world—including Australia, Britain, Canada, France, Germany and South Korea—has followed one strategy on coronavirus stimulus. Governments have temporarily paid the salaries of workers in order to prevent millions of layoffs.” However, the complex response in the U.S. has resulted in millions of unemployed workers, many of whom also lost their health care insurance.
“The stimulus bill that House Democrats passed last week,” the New York Times stated, “includes a new paycheck subsidy program, similar to those in other countries. For businesses that have lost substantial revenue, it would cover—as grants, not loans—as much as 80 percent of payroll costs, up to $60,000 per worker in annual salary. The policy would be expensive, yet still cheaper than the previous stimulus plans.”
Locally, Montecito Bank & Trust officer Ben Scott provided some insight to his institutions’ involvement in distributing PPP funds. “Wherever you have a local banking relationship that is the simplest place to start,” he began. “You know the bank and its bankers, the bank knows you, your business, your financial history and should be better positioned to facilitate the review of eligibility and to collect the documentation required.”
Montecito Bank & Trust has processed over 1,300 applications for PPP funds from clients and non-clients in recent months. “From the beginning, we believed our goal as the largest community bank on the Central Coast was to secure as much funding for as many businesses and employees within the Central Coast communities as possible,” Scott said. More than $100 billion in business funding is still available, Scott stated. “I continue to receive inquiries, mostly from members of the Carpinteria community that I interact with (from a safe social distance, of course).”
In Carpinteria, as of Monday, May 18, 112 loans have been administered by Montecito Bank & Trust under the Payroll Protection Program, with a total of $18 million distributed. Additional rounds of federal funds may become available, but as the New York Times wrote: “It’s still not clear what will happen. Mitch McConnell, the Senate Republican leader, continues to speak skeptically about the need for any further stimulus… any bill is likely to be more diffuse and complex than the approach of other countries, and any paycheck subsidy is likely to be less ambitious.”