There is a lot of talk, posturing, and activity in Washington D.C. these days around another round of stimulus.  While I won’t guess about the potential outcome, I do want to share two general observations.

Covid-19 has impacted businesses in very different ways.  Some industries are still down 80%.  Others are +/- 20%, and there is a small group of companies that are up a lot. The PPP program treated businesses universally, and I don’t think there was a choice early on but to create legislation that catered to the lowest common denominator.  A few months into the crisis, another round of relief could bucket businesses by how they have been impacted. 

In prior recoveries, the SBA has played a critical role in helping.  The government has tweaked SBA fees and guarantee amounts to create incentives for borrowers and lenders to utilize the program.  And these programs have worked well.  This time, the SBA community got thrown into the PPP fire, which has little to do with traditional SBA lending.

I applaud the SBA and everyone who works in and around the program for their PPP and EIDL efforts. The rollout has been far from perfect, and there have and will continue to be glitches.  That being said, everyone involved stood up to the immense challenge.  However, let’s not forget that the "old SBA" has an essential role in the recovery ahead. 

The Main Street Lending Program offers loans from $250 k to $300 M.  That’s a broad range.  A company that is applying for a $250K loan has entirely different attributes and levels of systems and sophistication than a company applying for a few million dollars. I doubt there will be much activity in the MSLP for loans under $1 M.  This is traditionally where the SBA functions well. 

I hope these ideas will be considered in whatever is percolating in Washington, D.C. today.