Sen. Marco Rubio, R-Fla., warned on Wednesday that a new wave of small business layoffs could come if Congress does not re-up the funding to the Paycheck Protection Program in its next round of coronavirus relief spending.
“You are going to begin to see, at some point, small business layoffs again as companies run out of the PPP money,” Rubio said on CNBC’s “Squawk Box.”
“That’s a real thing, and we are going to see it unfortunately, and then that begins to trickle across the rest of the economy, including the real estate sector because they can’t pay rent, and so forth,” Rubio said. “And so we have to act, we have to do something.”
Rubio, chairman of the Senate Small Business Committee, spoke as Democrats and the White House continued negotiations over the next Covid-19 stimulus package. The two sides have said that progress has been slow, and a deal is not expected until next week at the earliest.
The PPP allows small businesses to receive low-interest loans that are completely forgiven if certain guidelines are followed, such as using the money primarily on covering payroll. About $130 billion of the $650 billion allocated toward the program remains untapped.
An administration official told CNBC on Monday night that Democrats and Republicans have come to an agreement on extending PPP funding, though the exact details remain unclear.
Republicans proposed last week allocating $190 billion to the program. In contrast, a $3 trillion proposal unveiled by House Democrats in May did not include any new PPP funding.
Sen. Ben Cardin, D-Md., the top Democrat on the Small Business Committee, said Tuesday he was largely on board with the Republican proposal.
There is evidence that the PPP helped keep the economy from completely collapsing after Covid-19 forced closures of many businesses around the country.
One preliminary study by researchers at the Massachusetts Institute of Technology and the Federal Reserve estimates the program saved 1.4 million to 3.2 million jobs.
Small businesses have warned that they may have to start firing workers if they are unable to secure more federal funds.
According to a survey by the National Federation of Independent Business, approximately one-fifth of small business owners expect they may have to terminate workers after using their PPP loan. Nearly half suspect they will need more financial support in the next year.
On Monday, more than 100 former or current top executives, including Facebook Chief Operations Officer Sheryl Sandberg and Microsoft CEO Satya Nadella, issued a letter to Congress to do more than just “another round of PPP.”
The executives called for Congress to pass legislation creating federally guaranteed loans “that will enable small businesses to transform and sustain themselves through 2020 and well into 2021.”
They also argued in favor of legislation proposed by Sens. Michael Bennet, D-Colo., and Todd Young, R-Ind., that would provide partially forgivable loans to cover six months of expenses for businesses that have been especially hard hit.
Rubio said he was not opposed to the idea behind the effort, known as the RESTART act, but that it was too costly and could be cumbersome for the Small Business Administration to administer.
“We have tried to incorporate a version of that bill scaled down,” Rubio said.