By Thomas R. Ulbrich
Thankfully, our elected officials acted quickly to provide financial aid to small businesses and nonprofits through the CARES Act to combat the devastation brought on by the Covid-19 crisis. This included programs like the Payroll Protection Plan, or PPP, and Pandemic Unemployment Compensation, or PUC, which provides a $600-per-week unemployment bonus.
I appreciate that Congress likely did the best they could in the moment of crisis to quickly support our economic recovery during these unprecedented times. Yet with the quick action came unintended consequences that are negatively impacting many organization’s ability to use the money in a timely manner. Additionally, they will have the unpleasant challenge of either convincing or forcing many employees back to work when they may be making more at home on unemployment.
Specific challenges include:
- PPP rules for forgiveness. The money must be spent in eight weeks from deposit into an organization’s bank account. The purpose of the program was to get as many people back to work as quickly as possible, yet much of our workforce is under the mandatory state stay-at-home order, preventing us from spending the money as originally intended.
- PUC $600 bonus to unemployment insurance. Many organization’s employees are making more money at home than if they were to return to work. Although we appreciate the effort to take care of people during this crisis, Congress has created an additional unintended consequence for many organizations when some workers will be reluctant to return with less money in their pockets.
I believe that Congress could act to improve the ability for many organizations to benefit from this financial aid as originally intended and greatly increase their chance of survival with two simple changes to the law.
- Extend the PPP use of funds clock to start ticking when the governor lifts the stay at home order for those organizations currently being affected.
- Create a provision that allows employees that return to work to still collect the $600 PUC bonus for a four-to-six-week period after they return to work to get people back and to restart the economy.
Once the governor is able to safely lift the stay-at-home order and restart the economy, these two small changes could greatly increase the chances of many small businesses and nonprofits to not only survive, but to thrive as we slowly emerge from this crisis.
Thomas R. Ulbrich is president and CEO, Goodwill of Western New York, and executive in residence for entrepreneurship, University at Buffalo School of Management.