Some 300 to 400 nonprofit business leaders listened in Wednesday afternoon as U.S. Rep. Sean Casten, D-Downers Grove, helped explain some of the inner workings of Congress’ recently passed CARES Act.
CARES (Coronavirus Aid, Relief and Economic Security) was passed on March 30 to lend financial aid to businesses and individuals amid the COVID-19 pandemic. On Wednesday, Casten was joined by Robert “Bo” Steiner, district director of the U.S. Small Business Association on a webinar to help nonprofits with the process of procuring loans.
The webinar lasted about 50 minutes. Casten will hold another webinar Thursday afternoon to field questions from small business owners about loans they can receive.
Early in the session, Casten said he had been on a conference call with U.S. Secretary of the Treasury Steven Mnuchin an hour earlier and that $89 billion of the $349 billion Congress approved to help businesses had been deployed.
Casten said large businesses can survive a crisis because they have lending relationships and access to public markets, an advantage that nonprofits and small businesses do not have.
“You can’t necessarily ride through a liquidity crisis the way some of these large organizations can,” said Casten, who represents Illinois’ 6th Congressional District. “As a result, we very intentionally structured the program to target those smaller companies. We expanded to include 501(c)(3)s and 501(c)(19)s, which are veteran-owned organizations, recognizing those facilities are providing a critical resource.”
Casten hopes the CARES Act will help companies make their payrolls without having to lay off employees. There are parts of the loan that can be forgiven if the loans are used in the designed manner.
“We want to get to nonprofits, we want to include some forgiveness,” Casten said. “There’s some programmatic tweaks and it has created some inefficiencies, which are being worked through. It’s the challenge of creating such a massive program so quickly. There’s been some glitches as the banks roll this out because one form doesn’t agree with another. That has slowed the release of these funds. It’s a hiccup in the fact that the program has been up for four days.
“We’re moving up a very large program very quickly and it is getting rolled out in a fairly efficient way, but none of us are perfect.”
There are two types of loans, the Paycheck Protection Program Loan and the Economic Injury Disaster Loan. Steiner was asked about the timeline for those wanting to receive the loans.
“I can’t give you a specific timeline to say, ‘You will receive something by this date,’ ” Steiner said. “On the EIDL program, some disbursements have already happened. We expect that to accelerate due to the technology we’re using with the process of applications. On the PPP, the lenders are working very hard to manage the in-flow of applications they’re experiencing right now.”
Steiner described the process as the businesses submitting their applications, which are then submitted to the SBA for authorization, then go to a closing.
“I expect the first steps in that process to go relatively quickly, but it’s going to depend on manpower and staffing levels of your lender,” Steiner said. “On the back end, we’re looking at lenders to disburse very quickly, to get the funds out to the community. What does ‘very quickly’ mean right now? I can’t say 100%, but we’re trying to get a five-day initial disbursement and then the remainder being negotiated between the borrower and the bank.”
Casten thanked the nonprofit leaders for their sacrifices.
“We are in an inextricable linkage right now between a public health crisis and an economic crisis,” Casten said. “The one is the cause of the other is the cause of the one. If we move too quickly to open up the economy again, we are going to have a massive, much larger public health problem. On the other hand, as long as the economy is shut down, folks don’t have access to resources, we created food insecurity, there are inequities in the way that goes through that, those issues are exaggerated the longer we are here. We have to get this done together.”
The whole webinar is available at Casten’s website, casten.house.gov.