Senators Marco Rubio, R-FL, and Ben Cardin, D-MD, discuss the future of small business relief on May 6 at the first QuickBooks Town Hall: Connecting Small Businesses with Experts. Get the key takeaways from the live event, and read the transcript with video below.
Sarah Paul: Hello, and welcome to our first Intuit QuickBooks Town Hall. I’m Sarah Paul, director of global public policy and regulatory affairs at Intuit. Our goal with this new series is to connect small business owners like you with lawmakers, business leaders, and other experts, and we’re having our first conversation during what is traditionally national Small Business Week. Given the importance of small businesses in our economy, it’s more important than ever to lift up the voice of small business owners into the national dialogue. And of course we’re doing this town hall from different locations with different internet connections. So if we have difficulties, we’ll just keep going to give you the information.
First, we are pleased to welcome Senator Marco Rubio, who represents the state of Florida. Senator Rubio was first elected to the United States Senate in 2010 after serving in the Florida state government. He currently serves as chairman of the Senate Committee on Small Business and Entrepreneurship, which oversees the Small Business Administration. Welcome, Senator Rubio.
Marco Rubio: Pleased to be here.
Sarah Paul: And we’ll be joined in a few minutes by Senator Ben Cardin, who’s coming from a committee hearing. Senator Cardin represents the state of Maryland and was first elected to the Senate in 2006 after serving for almost 20 years in the US House of Representatives. He’s the ranking member on the Senate Committee on Small Business and Entrepreneurship.
And finally Intuit’s own, Luke Voiles will be joining us today. Luke is vice president and general manager of QuickBooks Capital. Luke and his team built an automated flow for eligible QuickBooks customers to support loan applications under the Paycheck Protection Program. Hi, Luke. Thanks for joining us today.
Luke Voiles: Hi, happy to be here.
Sarah Paul: First, I’d like to begin by thanking the senators for their leadership in action by working in a bipartisan manner to pass the CARES Act and the most recent round of funding for the PPP program. My first question is for you, Senator Rubio. How do you believe this program has been working thus far for small businesses and their employees?
Marco Rubio: Well, I think it’s performed better than anything else we’ve done as part of the CARES Act. And furthermore, I would add that, it has exceeded all expectations for a program that never existed before. You have to understand that until Friday, April 4th, it was the first day in the history of the world that any bank in America had ever tried to process a PPP loan, that the SBA had ever approved one and a borrower had ever applied for one. So this program didn’t exist. It was legislation that was drafted in six or seven days that was then implemented within six or seven days. And over the course of four weeks has put half a trillion dollars into the hands of small businesses and not-for-profits and independent contractors all across this country. You know, ADP reported a while ago that there were 20.2 million private sector jobs that were lost in one month alone in April.
That number would have been substantially higher were it not for PPP, allowing over what now stands at 4 million businesses to keep people on payroll. And in fact, I would add that the growth of that number would be exponentially higher this month were it not for that program. So I think it’s despite glitches in terms of how it operated. We’ve heard reports, for example, the private publicly traded companies got it. First of all, some of these publicly traded companies qualify under existing SBA standards. Publicly traded doesn’t make you not a small business in some ways in terms of the standards that already exist today in law, but those companies took out what came out to .035% point 0.0 0.35% less than 1% a 1/3 of 1% of all the money lent in this program. That means the rest of the money went to non-publicly traded companies. So when you look at 4 million entities out there that have received this cash or have been approved for it and are going to receive it, I think in a month in a brand new program of this size, scale and magnitude, I think it’s gone very well and I think the last three days have been the best days in the program.
Sarah Paul: Great. Thank you Senator Rubio, and I’m so pleased to say that we are joined now by Senator Cardin. Senator Cardin, thank you so much for joining us today, and thank you for taking the time out of your busy schedule to join us.
Ben Cardin: Oh, it’s my pleasure to be with you. Thank you.
Sarah Paul: Wonderful. Well, my second question is for you, Senator Cardin. Senator Cardin, do you believe the smallest of our nation’s small businesses are getting the help that they need and how can we as Intuit help them through this difficult time?
Ben Cardin: Well, first, let me underscore the point that Senator Rubio made. We’re very pleased with the programs that we have provided under the CARES Act for small businesses. We got money out quickly. We saved a lot of small businesses. It had problems on startup. There’s no question about that, and we need to get the data to understand exactly how the monies have been distributed today. But one thing is clear to me that our smaller small businesses need additional attention. They did not have the same type of banking relationships as the larger of the small businesses did, they were not first in line in order to get the PPP help and they need additional attention. That’s why we did allocate $60 billion on the second level of funds to make sure that they got to the smaller banking institutions and the community mission lenders such as CDFI’s and minority depository institutions so that we could reach the smaller of the small businesses and particularly those in underserved communities. So this is a work in progress. I think we need to do more to help the smaller of the small businesses. I think we need to do more to help the underserved communities and minority businesses, women owned businesses, rural small businesses, veteran owned small businesses, and we need to do more to help those small businesses that had a dramatic reduction in their revenues.
Sarah Paul: Wonderful. Thank you, Senator. Luke, you and your team from people all across QuickBooks Capital also worked to obtain approval from the Small Business Administration and the Department of Treasury to become an authorized PPP lender. How has this benefited our customers?
Luke Voiles: When PPP first launched, we set out to build an automated loan application process. So given the nature of the program where the validation was connected with payroll and to Schedule C tax filings, we realized that we were in a pretty unique position to help a broad swath of our customer base that uses us for payroll and also uses us to file their Schedule C taxes through TurboTax. So to Senator Cardin’s point, our base really is the underserved base. We have 6 million QuickBooks customers that use us for the accounting software. We have 1.4 million small businesses that use us for payroll. And if you look at those businesses running payroll, 80% of them have less than 10 employees, 57% of them have less than five employees. And on behalf of those, 1.4 million small businesses, we actually pay one in 12 working Americans in the United States.
We have a pretty large payroll business and we’re really happy to try to help support these underserved populations. We don’t really want to stop there either, right. The application process that we set up was, we thought it was a pretty great experience for our customer and most customers were able to finish that application in less than 10 minutes given the automation of data coming in through TurboTax and through payroll. But the next thing that’s on customers’ minds, really on our small business customers minds, is the forgiveness component. A lot of questions came in for this town hall on forgiveness. We are still waiting for the SBA to give us more detailed guidance on exactly how that forgiveness process is going to work. Once they do, our goal is to set up an automated process within the QuickBooks software to allow customers to track and to apply for forgiveness, whether they applied through us or through any bank. We want to help them with a form that allows them to travel, to go and apply for forgiveness. So we’re really happy to be here today engaging with all to help understand what’s top of mind for small businesses and we’re looking forward to the conversation.
Sarah Paul: Great. Thanks Luke. Well, when we opened up this town hall for registration, we asked our attendees to submit a question and we received more than 1,600 questions in less than 24 hours. Our goal was to select the questions and feedback that most represented what’s on the minds of our small business owners. We’ll begin with two members of Intuit’s own small business council, which is made up of a group of QuickBooks customers who help us raise up the voice of our customer to make sure small businesses have a seat at the policy table. Allison Devane runs a small business called Teaspressa in Phoenix, Arizona that sells all natural specialty blended tea that brews like coffee. Welcome Allison. I believe that you have a question for Senator Rubio.
Allison Devane: Yes. Hi everybody. Hi Senator Rubio. So, I have four store locations and a warehouse for my business. And considering that the PPP is only forgivable if 75% of the funds are utilized towards labor within the eight weeks of receiving the funds and the current reality of where there’s a lack of confidence in safety at the physical workplace for both employees and consumers. And not only that, but the fear of the funds just not being available if businesses choose to apply later when we are more confident in our market. Is there a plan to help those like me who have trouble paying rent while the stores are being closed and also is there help for our landlords so they don’t lose their properties as well?
Marco Rubio: Yeah. Well a couple of points. Let me start with what’s already in place. The law has in it an exemption on the rehire requirement. The 75% number is not in the bill, it’s how treasury interpreted and issued guidelines. So that number is something they came up with. The eight week period is in the bill. So, I remember simply this conversation and Senator Cardin’s on, so he can also confirm this. We recognize that there would be instances in which people would not be able to rehire all of their employees in an eight week period for a variety of reasons. And that’s bearing fruit. And so there’s an exemption to that requirement that says if you weren’t able to rehire everyone in the eight week period but by June 30th can show that you are at the same number of employees or comparable number of employees that you were pre-crisis you, you can apply for this exemption and still receive forgiveness.
The problem we have is that the rules over how you apply for that and how they’re going to interpret it has not yet been issued by Treasury. I suspect that the reason why they haven’t put it out yet is because they were afraid that everyone would sort of view that as an open window to jump through, to just kind of grab onto and not rehire people. And so they wanted more people rehired, but at some point they’re going to have to issue this guidance here sooner rather than later. I had a 30-minute talk yesterday with Secretary Mnuchin and walked him through why that’s so important. So my hope is two things, that we can get clear guidance from them on it. And then as this thing continues to unroll, we may find that the June 30th deadline is not the right cutoff date for someone and for a variety of reasons and there may be some efforts to extend that as well. That’s certainly something we acknowledged as possible in looking at all this. So, again, because of the geographic diversity and who shut down and who isn’t and, and the unique attributes of different industries, we need to be flexible about that moving forward. But that exemption is already in the law. We just need guidance on how they’re going to work.
Alison Devane: Okay. Thank you. I look forward to it.
Marco Rubio: Yeah me too, trust me.
Sarah Paul: Great. Thank you, Senator. Thank you, Alison. Next step. LaJuanna Russell who runs Business Management Associates, a management consulting firm providing human capital management for government. Welcome LaJuanna. I believe you have a question for Senator Cardin.
LaJuanna Russell: Yes. Thank you. Good morning, and thank you both for joining us this morning during this crazy time and we know you have a lot going on. My question also relates to the PPP because the IRS is stating that the loan will not be viewed as revenue, which is an awesome thing, but they’re also saying that the expenses the loan will be used for will not be deductible on taxes and these expenses like payroll, etcetera, your cost of goods sold are usually deductible kinds of expenses many times. So these two positions seem to contradict each other and you know, obviously we don’t want to have any kind of IRS big bills at the end of this. Can you give us some support in that area?
Ben Cardin: Well LaJuanna, first of all, thank you very much for the question and thank you for what you do. Our objective is to make sure small businesses stay viable during this pandemic. You do not have the same degree of access to capital that the larger companies do. So this interpretation by the internal revenue service was very recent, what they were trying to avoid is a double dip where the government is paying forgiveness for the costs of the expenses. And then the small business owner can take that as a deduction. However, that defies other equity issues. For example, if you were to use the credit that’s available to protect and re-employ individuals which is available to all small businesses, you can take the expenses and get the credit as well. So there is some disadvantage to using the PPP program in that regard. It’s my understanding that Senator Grassley, who is the chairman of the Senate Finance Committee and Congressman Neal, who is the chairman of the Ways and Means Committee have sent a letter to the treasury challenging this interpretation. So I expect very much the review by Treasury as well as taken up in the next legislative package. It’s not the Small Business Committee, it’s the Finance Committee. They’ve had jurisdiction over this. I also serve on the Finance Committee and we certainly want to make sure we provide equitable relief to our small businesses.
LaJuanna Russell: Oh, that is so awesome. Thank you so much. That’s really good to hear that you guys are already working on it. This has been as, you said, I, we work in government contracting and so we are typically seeing how things move in government a little slowly sometimes, but for you guys to pull this off and it’s just been an amazing, amazing feat and I think all small businesses across the country are just so thankful and thankful for your coming together and working together and getting this done.
Ben Cardin: Oh, we’re all gonna work together to make sure we get through this. As Senator Rubio said, when we crafted this program, we didn’t anticipate that we would still have the type of economic climate eight weeks later where small businesses can not operate at full capacity depending of course on what region of the country you may be located in. So we need to be flexible.
LaJuanna Russell: Thank you so much. Appreciate it.
Sarah Paul: Great. Thank you so much Alison and LaJuanna for joining us today. Now we selected some questions for our attendees. Let’s start with a simple question that many of you asked. And I’m going to ask it of all of our guests here today. Is it too late to apply for a PPP loan, Luke?
Luke Voiles: No, it’s not. There’s still money left in round two. We’re doing our best to open back up our application process. We had the focus on the customers who already submitted applications to make sure they got their money as fast as possible, but hopefully by the end of this week, early next we’ll reopen our application process to allow customers to come through and we’re rooting for a round three as well. So Senators, please help.
Sarah Paul: Great. Thanks, Luke. And I will open it up to the Senators to see if you have any thoughts on this as well.
Marco Rubio: I was just pulling up last night’s numbers. There’s still over a hundred billion dollars left of a guaranteed capacity under the program. Some lenders have stopped accepting applications as they work through their backlog or others have been up and running the whole time. But the answer to the question is no, there’s still time and the average loan continues to drop. So, if you need it, you should apply.
Ben Cardin: Let me just add to that, yes, there’s capacity today. We do expect that that total capacity will be utilized. We have asked that there be allocations made to mission lenders. So we’ve asked the secretary of the treasury to allocate some of the remaining funds to the CDFIs and the minority depository institutions and other mission lenders. So those that are having more difficulty getting the 7A loan from a traditional banking institution will have an opportunity, but we are committed to making sure that all eligible small businesses have an opportunity.
Sarah Paul: Great. Thank you. I now have a follow-up question for both senators as well. Senator Rubio, I’d like to start with you. Jody asks, how likely is it that there will be a third round of funding?
Marco Rubio: I don’t want to give odds on it. This is a very unusual time up here, but I think we need to do it. And, and for a couple of – the biggest problem this program has had from the very beginning is not who got it, it’s who didn’t. And the reason why is because it became this sort of Hunger Games free-for-all for limited funds. People figured out there’s limited funds available, it was going to run out and it became a fight for survival type deal. The need was always greater than the capacity. It was a new program. They gave us $350 billion as our cap and the appropriations process here. And that’s what we tried to structure the program around. But I still think there’s more need.
I think part of coming up with that program, that third phase, is going to be a combination of identifying who hasn’t, who needs it, that still hasn’t gotten it. And I think part of it may have to be if this is going to go longer than the eight weeks, is this now the time to sort of address a more extended period of payroll support. And so that’s a consideration. And so those are the two. And then obviously any lessons learned in this process. In terms of what we’ve learned are glitches in the law or what have you. That can be fixed. But I hope there is a round three. I think the need exists. I think the need will exist. I don’t think there’s any question that this is not going to be solved by June 30th of this year, or by the time the funds are run out, potentially some time next week.
Ben Cardin: Let me just underscore what Senator Rubio said. I fully believe there will be a third round. And I really believe there’ll be a major stimulus package. Uh, we know that the major need areas that have been at least articulated is to continue to work on under the pandemic itself that the public health issues, state and local government need help. And that has been articulated not just by members of Congress, but by the president himself. So I think that’s going to be an issue that will be taken up in the next–we call it actually the fourth– stimulus package. We passed three major stimulus packages to date and the third was modified with additional funds. Now, how will that deal with the economic issues is really an open question. There’s talk about whether there’s going to be additional stimulus for individuals such as changes in the tax code or additional refund type checks from the IRS.
But there’s also a need for business attention…moving small business. So in this package, we will certainly look at how we can make the tools that are currently available more effective. Do we need additional resources in the programs that we have already authorized? And are there modifications that make sense going forward? As I said a little bit earlier, I would hope that our target group on small business would be to make sure that those small businesses that are in underserved communities, those small businesses that are the really small, the small, smaller-than-small businesses and those small businesses and have had a dramatic reduction in revenues can get the help that they need. When we first crafted a program, and it was a right way to do this, we wanted to get the money out quickly because we wanted to save small businesses, so this self-certification process was really streamlined, so money could get out to small businesses as quickly. As we look to what comes next, I think we can be a little bit more selective and to make sure that we get the help to the small businesses that truly need the additional help.
Sarah Paul: Great. Thank you, Senator. Senator Rubio, I was wondering if I could follow up with you for a quick moment on what might longer term payroll support look like?
Marco Rubio: Well, that’s a great question. I think there’s a couple of factors to keep in mind. The first is, there’s going to be variation in industries. Some are going to be– for example, I personally believe that tourism and hospitality, hotels and to some extent restaurants were the first ones thrown into the crisis. They’re going to be the last ones that come out of it for a lot of different reasons out of their control. So that will be a factor to consider, I think, in addition to that– looking at what we’ve learned about the dynamics, so for example, in Florida, 64 of our 67 counties have now a phase one reopening.
But there are restaurants that are allowed to open at 25% capacity or whatever it might be. But their economics are not set up for, or the rents are not set up for 25% capacity and that their employment numbers inside of a 25% capacity. So the question now becomes, you know, whether you can index the aid to some of it, you know the more intricate we get, the more paperwork is required, the more verification is required, the longer it takes to get these loans out. The one thing I’m pretty confident of is that we’ve now built a stable of 5,400 lenders, meaning, including nonbank lenders and CDFI’s and fintech and others. I think it makes sense to just continue to build out that capacity, but also to use it as the route by which any future assistance is now delivered. I mean, ideally if people have already applied and received a PPP loan and you wanted to add to what they’ve already gotten another four weeks, you could just simply process it that way and there’s an additional payment through the same mechanism.
It’d be a lot easier to do it, but there’s a lot of things that we have to think through on it. Obviously we have the benefit of a little bit more time than we did the last time we came together. But in terms of, I am of the personal view, I’ve told this to everyone, we need to assume, I’m not saying that this is true, but we need to assume that we’re going to be facing something, restrictions until the end of 2021 because that may be how long it takes to develop a vaccine, clear it and make it broadly available. So we have to start thinking in those terms, not in terms of everything will be fine by November. If we’re wrong and it comes sooner, that’d be great. But, we have to prepare for that sort of outline here.
Sarah Paul: Great. Thank you, Senator. So we had more than 200 questions that focused on PPP loan forgiveness. Some attendees are concerned about forgiveness rules changing after they accept the loans. Others are concerned that the current rules just don’t fit their business needs. This question will once again be for both senators. Senator Cardin, I’ll ask you first, Michael asks, how will you ensure that small businesses who followed the guidance on obtaining these small business loans and kept employees on payroll will not be penalized for taking these loans? And what type of oversight will Congress perform?
Ben Cardin: Well, thanks for that question. I have a very, very high degree of confidence that if you follow the law that we passed, you’re going to get the loan forgiveness. I don’t think there’s any risk factor there. Now the rules are pretty restricted. You have to spend the money during that eight week period starting with the origination date of your loan or the purposes that are spelled out. And Senator Rubio’s absolutely correct. The 75/25 split between payroll and other expenses was set by Treasury. So you’re going to have to follow those guidelines. If you want to be 100 percent safe, we get the maximum amount of loan forgiveness and you must return to the pre COVID-19 workforce numbers by the end of June in order to get the full maximum forgiveness of the loan. If you do that, you’re safe, it’s going to happen.
Now what is, what might happen is that Congress may change some of those standards to make it a little bit easier for people to get the maximum amount of loan forgiveness. That’s something that’s under consideration. That could happen. I don’t think you can plan on that happening. You’re not going to be penalized if you spend the money during this eight week period and you’d have your payroll returned by June. You’ll get the maximum forgiveness, so that’s not, you will never be penalized, but it’s also possible that we will/could ease up the eight week period or we could change the date. The end of June as Senator Rubio has previously mentioned. That’s always possible. You can’t plan on those changes. I think you have to plan on the law being how it is today. And if we provide additional relief, I think we will certainly be looking at those that have exhausted their relief under the PPP program and needed additional help.
Sarah Paul: Great. Thank you. Senator Rubio, what are your thoughts on this?
Marco Rubio: I agree. I think that by and large, if you adhere to the 75% and payroll mechanism that way, which the vast majority of companies will be able to, I think you’re in good shape. I think where the question really lies is in the exemption language because the exemptions in statute, but how you apply for it and how they’re going to interpret it is a matter of debate. Or I should say it’s a matter of, of uncertainty right now. In the first four weeks of this, the calls were about the eTRAN system not working, what forms do we use, why hasn’t my money been disbursed yet. I think in the last 72 hours it’s become almost exclusively about this issue of forgiveness.
And we’re going to have a call later today in lieu of a hearing with Secretary Mnuchin and Administrator Carranza of the SBA. We have asked the administrator of the SBA to come in next week as well before the committee,, probably via electronics like this and we’re going to be pushing hard on this because really if the forgiveness is not there, then the very intent of the law is gutted. This was never designed to loan money and have debt put on the backs of businesses that are struggling. It was designed as a way to deliver support for payroll to small businesses. And the only reason why there was a loan component to it is that that is the incentive to use it for payroll instead of not using it for payroll. That’s the only reason why there wasn’t the loan component put in it.
Sarah Paul: Great. Thank you, Senator. Luke, Holly asks, what’s the best way to track spending of the PPP funds in order to ensure forgiveness?
Luke Voiles: Yeah. I would think about it the same way you think about your accounting, right? We have an automated accounting platform in QuickBooks. If you use QuickBooks, I would make sure your accounting entries are up to date. Again, we’re working on some forms /reports that can be produced out of QuickBooks that can help automate the process to request forgiveness. But we still are, as the senators have both mentioned, waiting for the guidance from the treasury and the SBA to understand exactly what the details look like, so we can make sure our customers get it right.
Sarah Paul: Great. Thanks Luke. Senator Cardin, Brandon wants to know if there are any plans to suspend credit card interest and late fees for small businesses during the shutdown.
Ben Cardin: Well, I know that the credit issues are on the table. It’s not the committee I serve on. I know that the banking committee is looking at these issues. We did put a very modest provision in the CARES act to deal with foreclosures and evictions — a delay in those issues. We did not provide any other type of credit relief. I know that the committees are looking at this now, but I really don’t have a good feel as to what is likely to happen. I know it is an issue of concern. We know that the private sector in some cases is making their own arrangements with their customers. Recognizing the hardship of COVID-19. Uh, we have to also recognize that these are independent contracts that are made between the customer and the business and that government has to be careful in the manner in which it intercedes in these issues. But this is a national emergency and we certainly need to take a look at this to provide some general guidance for how businesses should be behaving during these very troublesome times.
Sarah Paul: Great. Thank you, Senator. Senator Rubio, Juan asks, will Congress pass legislation to get credit rating companies to change their formulas to account for economic uncertainty during this pandemic?
Marco Rubio: Well, two things I would say. The first is there was an active discussion at the banking committee about what that would look like and how that would work. Obviously it has implications in the broader credit markets that we have to balance these equities on all of it. But I know there’s conversations going on about that and people are considering it. I will note, and this doesn’t solve the problem for everybody and it certainly doesn’t solve the problem for the credit card problem for most people. But the CARES Act already requires lenders to inform the credit agencies that the client is current if they’ve sought relief from the lender due to these disruptions. So if you’ve sought relief from a lender due to these disruptions, you know, delay in payment, made any sort of arrangements, they’re supposed to report you to the credit bureau as current and not in default.
But again, that’s not going to answer the problem for everybody, so I think there’s more to think about in that regard because there’s no doubt that both personal credit and commercial credits of millions of people in businesses is going to be damaged during this time and then make it very difficult for them to access credit in the future. So whether that’s a change on how that can be used in future credit reporting and credit decisions or whether that’s something that happens at the front end is a topic that I need, needs to be looked at and we need to understand the ramifications of whatever decision we make broadly.
Sarah Paul: Great. Thank you, Senator. Luke, Bob asks, how can a mom and pop business like an LLC share in the protections of the PPP?
Luke Voiles: We’re actually pretty proud of the fact that we opened up to the self-employed population with an automated application process, as many of the lenders weren’t able to serve that population. The average loan size of the self employed PPP loans that we’ve made are just under $7,000. So these are the smallest of the small mom and pop businesses that are trying to get funds. Right now if you filed your Schedule C through TurboTax and you use QuickBooks Online or QuickBooks Self Employed to track your business expenses, we’re able to serve those populations. So yes, it’s one of the most underserved, most difficult to go into a bank and actually get a PPP loan. But given the TurboTax business and our ability to import the Schedule C with customers’ consent, we’re able to in an automated way serve those populations as well.
Sarah Paul: Great. Thanks, Luke. Senator Cardin, my next question is for you. Rebecca asks, how do we handle cases where employees can’t come to work because they have no access to school or childcare?
Ben Cardin: Well, in the first stimulus package that was passed by Congress, we provided leave for those individuals that cannot work because of COVID-19, either because of the circumstances of their own health, or health of someone else in their family, so we have provided some financial relief for employers in regards to family and medical leave. In regards to the supervision of your children because of schools being closed, it’s a little bit more complicated. It is a situation that we fully recognize. That’s why we have been using a lot of telework. That doesn’t always answer the question because it’s hard to telework when there are children running around your house, but we are looking for ways in which we can accommodate the new reality of the fact that schools have been closed for a lengthy period of time, and we still don’t know how the reopening is going to take place in many of our communities. So it’s an area that I expect will be dealt with again in the next major bill considered by Congress as to how we can deal with the realities that many workers are being disadvantaged because they have to take care of children that they anticipated would have been in a classroom by now. We also are providing a relief for a childcare type of circumstances for those that are central workers. So we are trying to deal with this issue but more work needs to be done.
Sarah Paul: Great. Thank you, Senator. My next question is for you, Senator Rubio. Senator Rubio, many of our attendees want to know what Congress can do for restaurants and other hospitality companies, since many had already laid off employees prior to PPP and these companies need significant funds to restock supplies and retrain employees.
Marco Rubio: First of all, it’s one of the industries we thought about when the exemption language came into place and that is that it would be difficult to, in some cases, even rehire people because they may have gone to work in some other service sector opportunities, so you’d have to go find new workers to come back. And other cases you may be able to sustain the payroll of your former employees for a period of time, but you may not be operational because as an example if you’re a business travel hotel or a tourist destination hotel, you might be seasonal in the case of a tourism or even if you’re not seasonal, the amenities that people travel to visit may not be open. Therefore, no one’s going to make the trip. And then there’s the uncertainty of consumer behavior, right?
How are people going to behave? Are they going to eat out as much because of fear of the pandemic and/or because they don’t have money because they’ve been unemployed and they’re, or they’re worried about losing their jobs so they’re saving. So I think these are the things that we just can’t anticipate and what we should anticipate but can’t really quantify yet and that are completely out of the control of the industry, which is why I continue to believe that hospitality needs to be treated and viewed a little bit differently from the other industries because there’s a lot of externalities that are out of their control from local restriction to international travel to consumer behavior. So, that’s why that flexibility was in place and that’s why we need to consider whether for some industries, the June 30th cutoff date as an example may not work.
One additional point is that at some point here we’re going to move to the phase of recovery. Right now we’re in response mode, but at some point we have to have a conversation about recovery. And that will mean different things to different industries. For some, it would just be allowing them to open again. For others it will be about the capital costs involved and positioning yourself to reopen and to reopen in a way that might still have some level of restrictions in place that you have to pay for and account for. Now these plexiglas and things that are being put up in different places. I mean it’s one thing for Walgreens and Rite Aid to put it in all their stores around the country, it’s another to ask a small vendor to do that. It comes at significant cost so that reopening might require you to undertake some expenses that you may not have in your budget. So there’s a lot to unwrap there when it comes to recovery, and I certainly think hospitality is itself a very challenged industry that should be looked at perhaps differently from some other industries.
Sarah Paul: Wonderful. Thank you Senator Rubio. Senator Cardin, my next question for you is Edmita asks, how can we guarantee work for employees if the crisis continues for more than 12 months?
Ben Cardin: Well, we expect that there’s not going to be one off switch in our economy so we are going to have challenges moving forward. One thing good about small businesses, they’re very innovative. That’s where job growth takes place. They figure out ways of doing things a lot quicker than bigger companies can. So, there’s going to be new economic challenges and I have confidence in the small business community that they’ll be able to figure out a way to deal with the economic realities and do it in a way that America will continue to lead the world as far as economic growth is concerned and small businesses will lead the way. I wonder if I might just add to some of the things Senator Rubio said because I agree completely with his response, but I want to just underscore that the PPP program is limited to payroll and a few other expenses and small businesses have other needs, as was pointed out.
The EIDL program, the Economic Injury Disaster Loan program, provides a much broader ability to get financing for working capital and inventory and other needs. And the programs were designed so you can apply for both a PPP program — a loan forgiveness — and an EIDL loan as long as it’s not used for the same purposes. So we are finding that there’s already been over a million applications filed for EIDL loans. Uh, and we are, that’s directly by the small business administration. We provided an extra $50 billion of capacity, which is $300 billion of loan capacity by the appropriations. So there should be a significant ability for a small business to get the working capital and inventory they need through the EIDL program. They were made eligible for that in the first stimulus bill passed by the United States Congress.
Sarah Paul: Wonderful. Wonderful points. Thank you, Senator Cardin. I wanted to ask each of the panelists today for any final thoughts. You’ve all been so generous with your time, so thank you. Starting with you, Senator Rubio. Final thoughts.
Marco Rubio: Thank you. And I’m sorry, I’m going to drop after my final thoughts only because I have a call pending here real quick. But just thank you for this opportunity to share information. I want to thank everyone on this call for your patience on this very important program and just know that both Senator Cardin and I and multiple members are actively engaged and involved every day with the administration to make sure that the rules and the guidance that are issued are reflective of our intent. We know we have a lot more to do here. This is unprecedented, truly. There are things to come that we haven’t yet anticipated that no one nation on earth is built to respond to. It’s going to take a lot of work, some trial and error, but know that the intent is there, that we fully understand the crisis facing small business in America and we hope to do the very best we can to do as much good as possible and the least amount of harm as possible. And that’s our goal.
Sarah Paul: Wonderful. Thank you, Senator Rubio, and thank you for your time today. Senator Cardin, final thoughts.
Ben Cardin: I want to just echo what Senator Rubio said. We thank you very much for this opportunity and more importantly for what you do to help businesses that otherwise would have a very difficult time accessing the help that Congress has provided under the CARES Act. We are open for business, what I mean by that is we recognize we have not finished the work by what passed to date. We know we’re gonna need to do more and we need your input. I’ve said this a couple of times. We had to act quickly. I’m proud of the way we acted. I think we saved millions of small businesses. We know that it’s now been over 3 million loans given out under the PPP program and you add the EIDL program, it’s even larger numbers. We recognize that we’ve gotten a lot of help out, but we want to make sure that we deal with those small businesses that are really those smaller, the small businesses that are traditionally in the underserved community and have seen a significant loss of revenue.
Now as we look to the next chapter, what comes after the PPP funds are exhausted, or what comes after, as many of you have asked in your questions, as our economy does not rebound to its full amount or as Senator Rubio said the additional cost you’re going to have to comply with new realities of the health care needs. Then let’s take a look at how we can tailor a program that can really help our small businesses get through this time so that we have you again as the growth engine of America, the innovation engine for our country so that our economy can perform at its top level. I look forward to working with you and again, thanks for giving us this opportunity.
Sarah Paul: Wonderful. Thank you, Senator. Luke, do you have any final thoughts?
Luke Voiles: Yeah, I mean, small businesses are the backbone of the American economy. We will not be on the road to true recovery until we help small businesses get back on their feet. It really breaks the Intuit family’s heart to see small businesses closed on main street. So we’re here to do everything we possibly can to help the government and help the institutions for this relief and let your businesses get back on their feet.
Sarah Paul: Great. Thank you Luke, and once again, thank you again to Senator Rubio and Senator Cardin for taking the time to answer your questions and for all of your hard work on behalf of our nation’s small business owners. I would just encourage everyone here today to visit the QuickBooks Small Business Help site to stay up to date on solutions to help small businesses navigate the PPP. Once again, thank you to all of our guests and attendees for joining us today.
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