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Thursday, May 23, 2024

US CEOs letter to Congress: Leaders urge to support small businesses

The letter by US CEO's warned that if Congress did not act to provide financial relief to small businesses, the consequences could cripple the nation’s economy.

On Monday, more than 100 current and former chief executive officers at major companies in the United States wrote a letter urging Congress to act to implement long-term financial relief for small businesses to mitigate the economic catastrophe brought about by the COVID-19 pandemic.

The letter was spearheaded by former Starbucks CEO Howard Schultz and signed by many prominent business leaders, including the CEOs of the Walt Disney Co., Microsoft, Walmart Inc. and Google’s parent company, Alphabet Inc.

US Leaders urge Congress 

Leaders of companies like Walmart, Facebook, Google-parent Alphabet and Starbucks warned of a “catastrophic” impact on the economy and employment if federal aid is withheld from companies dealing with the devastating impact of the COVID-19 shutdowns.

“Most small businesses don’t have enough cash in the bank to weather more months of reduced revenue and customer traffic. To survive until a vaccine is widely available, millions of small businesses will require longer-term support from the federal government.”

The CARES Act passed by Congress in late March authorized several lending programs to help companies weather the crisis, but its additional $600 per-week in federal unemployment payments to workers laid off amid the pandemic has lapsed, as has its moratorium on evictions for those who rent their homes.

Read more: Optimistic US economic advisor predicts 20% growth in second-half

“Small businesses are too critical to our country’s economic strength to let fail,” the business leaders said in the letter.

Aid should be built into PPP

The letter added, “While the Paycheck Protection Program (PPP) has provided short-term relief for many, that lifeline is coming to an end. Another round of PPP would certainly be helpful for many of these businesses, but the hardest-hit sectors will need much more significant and sustained support.”

The letter called for funds to be given first to small businesses owned by people of color who have been historically disadvantaged in terms of access to capital and other resources.

The CEOs ask that businesses be allowed flexibility in how they use their loans and that the businesses that have been hit the hardest by the COVID-19 shutdowns have their loans turned at least partially into grants.

The letter also advises that the aid be built into the existing PPP infrastructure so that it can be delivered expeditiously.

Read more: Jobless claims rise as US lawmakers debate aid

These firms largely do not have enough cash on hand to wait for a coronavirus vaccine and face “potential financial ruin that will make the nation’s current economic downturn last years longer than it must.”

“At this moment of crisis, we urge you to transcend partisanship,” the letter said.

Financial ease for small businesses

They called for federally-guaranteed loans, which can be at least partially forgiven and last for more than two-to-three months, for all small businesses that need it, especially for minority-owned firms.

Treasury Secretary Steven Mnuchin has been meeting with House Speaker Nancy Pelosi regularly, including over the weekend, to negotiate a new spending measure but the sides remain far from a deal.

Mnuchin said Sunday that President Donald Trump’s administration wants to ensure schools reopen and opposes any support for state and local governments, despite facing a massive increase in expenditures caused by the pandemic.

Read more: Manufacturing growth ahead of Fed meeting, revival of US economy threatened by surging coronavirus

“The Democrats, right now, are insisting on over a trillion dollars” to state and local governments, and “that’s something that we’re not going to do, to bail out those states that had financial issues,” Mnuchin said on ABC’s This Week.

He also again claimed that the extra federal payments to jobless workers means they earn more staying home than they do by working.

Pelosi pushed back on that notion, saying the Republican proposal to cut the payments to $200 a week “does not meet the needs of America’s working families.”

“Overwhelmingly this is making a difference, it’s keeping people out of poverty,” Pelosi said Sunday on the same program, adding that “we really need to support state and local governments to cover the expenses they have from the coronavirus.”

The letter comes as negotiations between Democrats and Republicans over the impending COVID-19 relief bill have stalled due to multiple disagreements.

AFP with additional input by GVS News Desk