On Wednesday, U.S. Sen. Marco Rubio, R-Fla., the chairman of the U.S. Senate Small Business and Entrepreneurship Committee, convened a hearing titled, “Perspectives from Main Street: COVID-19’s Impact on Small Business.”
Rubio’s opening remarks as prepared can be found below.
I would like to thank everyone for joining us, both in person and virtually, and welcome to our witnesses for today’s hearing, titled ‘Perspectives from Main Street: COVID-19’s Impact on Small Business.’
There is no doubt that the COVID-19 pandemic has impacted every American in some way.
For some, this pandemic has impacted their health or the health of a loved one.
Too many have unfortunately lost loved ones.
For others, this pandemic has altered their day-to-day way of life.
Many have lost their jobs or have had to shutter their doors.
It is clear the economic fallout of the COVID-19 pandemic has impacted millions of Americans.
By April 2020, the U.S. unemployment rate had increased to 14.7 percent.
Only two months prior, in February 2020, the unemployment rate had been only 3.5 percent.
Similarly, in the first quarter of 2020 the United States saw a 5 percent decrease in the annual real GDP rate, compared to the fourth quarter of 2019 which reported a 2.1 percent increase.
Our nation’s small businesses have, undoubtedly, been amongst the hardest hit by COVID-19’s economic impact.
The United States Small Business Administration estimated that in 2019 nearly 30 million small firms were in operation, employing more than 47 percent of all American workers or nearly 60 million individuals.
Now, in the wake of the COVID-19 pandemic, it is estimated that 54 percent of those small business jobs are considered highly vulnerable, including those in the accommodation and food services industry.
A recent snap survey by the U.S. Census Bureau reported that, in data collected between April 26th and May 2nd of this year, 83.5 percent of small businesses surveyed within this industry reported that they had experienced a large negative effect due to the pandemic.
Unfortunately, this has been the case for many sectors across our economy.
That same Census Bureau survey, however, suggests that throughout the month of May, the number of firms reporting large negative impacts had decreased from more than 51 percent of firms to 45 percent of firms.
Similarly, the number of small businesses having reported decreased revenue or a decrease in employees has also gone down in the last four weeks.
As these statistics have decreased, the number of firms having reported that they received financial assistance in the form of either a Paycheck Protection Program loan or an Economic Injury Disaster Loan or Grant have increased substantially over time.
According to the most recent SBA data:
More than 4.4 million PPP loans have been made for a total of more than $510 billion with an average loan size of roughly $114,000; and
More than 707,000 EIDL loans have been made for more than $55.7 billion.
While the process of establishing and administering the PPP program has certainly not been without its faults, this program has clearly had an immense and positive impact on the small business community.
The PPP was created to provide small firms and their employees with emergency funding to sustain their businesses during this uncertain time.
The PPP was designed to allow small businesses to keep their workers on payroll and ensure that firms would once again be able to operate after the crisis has passed.
Following the passage of the CARES Act, demand for the program was incredibly high. So high that the first round of funding was depleted in less than two weeks, requiring Congress to appropriate an additional $310 billion in program funding.
Millions of additional small businesses, independent contractors, and sole proprietors were able to participate in the program due to this additional funding.
A recent survey by the National Federation of Independent Business noted that 77 percent of surveyed small business owners had applied for a PPP loan, of which 93 percent had received funding.
In my home State of Florida alone, approximately 336,000 PPP loans have been made for more than $30 billion.
Each one of those loans represents a business surviving and a worker receiving a paycheck during this unbelievably trying time.
It represents a lifeline given to an American business who has suffered through no fault of their own.
While these statistics are certainly encouraging, we recognize that small firms and communities throughout our nation is still struggling.
Just last week, the SBA and the Treasury Department announced that they would be increasing their efforts to ensure the PPP is successful in reaching small businesses in all of our nation’s communities by setting aside $10 billion of PPP funds for Community Development Financial Institutions, or CDFIs for short.
This effort to improve CDFIs ability to administer PPP loans, and to set aside funding for their use, is meant to ensure that underserved communities can better access the benefits of the PPP.
This work is of enormous importance and I welcome the SBA and Treasury’s recent efforts in this area.
I don’t want to go any further in my remarks without acknowledging what has taken place in the last several days, in my hometown in Miami, here in Washington, D.C., in New York, Minneapolis and all across the country.
All of us have felt pain, sadness and, of course, outrage at the murder of George Floyd.
The African American community is experiencing a deep and unique pain and outrage because of this killing, and at the long history of injustice that this murder evokes.
This comes in the context of a pandemic that is already disproportionately harming communities of color, and which has both highlighted and exacerbated racial inequities in our society
Ensuring that the worker-focused economic relief of the PPP makes it to small businesses in these communities must be an ongoing priority.
The work of this committee has its own part to play in helping address the economic challenges facing Americans of color during this crisis.
I want to thank Ranking Member Cardin for his longstanding and continued leadership in advocating for underserved communities, and for his partnership on this front. I look forward to continuing that partnership.
We certainly have more work to do.
Today’s hearing will allow members of the Committee the opportunity to explore what the small business landscape currently looks like in various industries and in all of our nation’s communities.
While this is our first formal committee hearing following the passage of the CARES Act, it will certainly not be our last.
The Committee has been actively engaged in oversight over the implementation of the programs in Title I of the CARES Act and we are committed to continuing to conduct vigorous oversight over these programs to ensure they are operating as Congress intended, including addressing fraud and misuse of funding.
Our oversight efforts will continue next week, on June 10, 2020, when the Committee will welcome SBA Administrator Jovita Carranza and Treasury Secretary, Steve Mnuchin for our next hearing.
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