On April 9, 2020, the Bay Area Houston
Economic Partnership held a virtual general membership meeting featuring Sen.
John Cornyn and the federal response to COVID-19 as well as Tim Jeffcoat,
district director for the Small Business Administration. The meeting was
facilitated by BAHEP Marketing Manager Jimmy Spence, and more than 180 BAHEP
members were in virtual attendance – a first in the 44-year history of the
Senator John Cornyn
BAHEP President Bob Mitchell opened the
meeting with welcoming remarks and appreciation to Sen. Cornyn for his
participation. The senator said, "I’m glad that Tim Jeffcoat is on the line,
too, because he and the SBA people may be the most popular folks in town now
given the $350 billion that we are trying to push out to small businesses to
help them stay afloat during this very difficult time.”
Sen. Cornyn reported that Congress has
passed three pieces of legislation to date the latest of which is the
bipartisan CARES Act (Coronavirus Aid, Relief, and Economic Security Act) that
was signed at the end of March. It has already brought $47 million in recovery
grants to the Houston area. He added, "We know that this is a health crisis and
an economic crisis unlike any we’ve experienced before. If you told me a couple
of months ago that I’d end up voting for $2.2 trillion in spending in a single
bill, and that the vote would be unanimous in the Senate, I wouldn’t have
is first concern
Sen. Cornyn said that
healthcare is obviously the first concern. "We’ve pushed $100 billion out the
door of which $30 billion will be going shortly. There’s flexibility on how
that money is spent, but the idea is to maintain capacity to make sure the
hospitals and professionals are there to take care of those who need them,” he
Sen. Cornyn said that the key to dealing
with the pandemic is ultimately developing drugs that can treat COVID-19. He
stated, "Having a vaccine is the goal, but that’s probably going to be towards
fall at the earliest. In the meantime, individuals and businesses need a
lifeline; so, the federal government is providing by direct deposit to your
bank account, if you filed a 2019 tax return, up to $1,200 a person, $2,400 for
a married couple, and up to $3,400 for a family of four that makes up to
$150,000. This is designed to tide people over to the next step which may well
be unemployment insurance. We’ve extended unemployment insurance by 13 weeks
and expanded the benefit by adding an additional $600 per week in federal
unemployment benefits in addition to the state’s portion.”
The senator also said that it is necessary
to make sure jobs are still going to be there for people when this economy
starts coming back. He offered, "That’s why we established through SBA
certified lenders the Paycheck Protection Program (PPP). It’s initially funded
with $350 billion and designed to provide a strong incentive for employers if
they can, and not everybody can, to maintain their payroll and to help pay
their rent and overhead. If they do that through June, what initially started
out as a low-interest, one percent loan can then be forgiven.”
receiving applications on April 3rd. Sen. Cornyn admitted that there
have been challenges due to the overwhelming number of applications. He
explained, "This is a completely new system; so, it’s a big learning curve for
all of us. There are going to be gaps and unintended consequences, and we want
to learn from that and make sure that we get the money to the people who need
it the most as fast as we can and not waste any money if we can help it. I
encourage you to reach out to my team in Houston, Jay Guerrero and Ben Daily, if
there are other things we can do to help.”
The senator reported that the Federal
Reserve has announced another lending facility that will loan out close to half
a trillion dollars, which will have a huge boost in terms of liquidity for
companies that are finding difficulty with cash flow. He said that for
companies with the collateral to secure those loans and pay them back on
reasonable terms over the next couple of years, that’s another effort to help
those large businesses stay as healthy as possible.
critical for 501(c)(6) non-profits
During the virtual
meeting, Mitchell expressed his apprehension in regard to financial relief for
501(c)(6) non-profit organizations. He said, "Senator, one of the concerns we
have is that 501(c)(6) non-profits were not eligible for the PPP loans and/or the EIDL Program
(Economic Injury Disaster Loan Program). I actually got a phone call earlier
this afternoon that these non-profits are eligible for the EIDL Program.
It’s so confusing. What can we do moving forward regarding the PPP? Is there a
chance of getting 501(c)(6) non-profits eligible for that?”
Cornyn replied that he has had enough
feedback from people like Mitchell, chambers of commerce, and others to take
another look at the PPP and possibly expanding it to include 501(c)(6)’s. He
said that the goal is to allow non-profits to keep their employees on the
payrolls, too. Mitchell was appreciative of that possibility and said that it’s
been a tough situation for organizations like BAHEP, the Clear Lake Area
Chamber of Commerce, and the League City Regional Chamber of Commerce.
Mitchell then asked the senator what he
would like to see in the next coronavirus relief package that would address
issues that may have been missed in the first three bills that have been
passed. Cornyn replied that there have been ideas like an infrastructure bill.
He said, "I’m game. We should have done an infrastructure bill already. The biggest challenge is how to pay for it.
If the idea is getting people back to work, infrastructure will do that.
"We need to look at infrastructure across
the board to include the oil and gas sector and our ports. We know that the
Port of Houston is critical. What I really want to do is to make sure that all
the money we’ve pushed out the door so far is working the way we intended and
we have an opportunity to fix some of the gaps, like the non-profit issue we
just discussed, before we go on to do other things.”
Mitchell then asked Sen. Cornyn to keep the
coastal spine, a storm surge suppression system for the region, in mind as part
of an infrastructure bill. Cornyn agreed that it was an important project.
district director provides guidance
Mitchell then questioned
if the EIDL advances are available now. Jeffcoat answered, "They absolutely
are.” He continued, "In many cases for businesses, it makes sense to pursue
both the Economic Injury Disaster Loan, since it is for a much longer period of
time and covers operating costs, as well as the PPP, because its emphasis is
going to be on payroll.”
Spence asked Jeffcoat to comment on efforts
to help people with existing SBA disaster loans that they may already have.
Jeffcoat’s answer included not only disaster loans but business loans as well.
He said that lenders in the Houston area make SBA-guaranteed loans on a regular
basis – every year over $1 billion. He said that for any business which
currently has an SBA micro loan or a 504 loan, those can be deferred for up to
six months. "If you have one of those, just contact your lender, and they
should take care of you,” Jeffcoat advised.
For existing disaster loans like from
2017’s Hurricane Harvey, these have automatically been deferred by the SBA
until Dec. 31, 2020. For a business that might currently have a 7(a) loan, the
most popular loan guaranteed by the SBA, the SBA is making the payments for
these businesses whose loans are in a regular servicing status for the next six
months. That began on March 27th.
lenders make SBA loans?
Spence then asked for clarification
on institutions that are able to make SBA loans, since there has been confusion
in this regard. Jeffcoat said that in the Houston area that includes Harris
County and the 31 counties around it, there are about 190 lenders working with
the SBA. All of the lenders are capable of processing the PPP loans.
As of April 9th, only about $130
billion of the allotted $350 billion has been approved. If someone’s bank is
not currently making these kinds of loans, Jeffcoat advised people to go to the
SBA website which has a list of lenders who are willing to take new customers
who do not have an existing relationship with the lender. The website is www.sba.gov/offices/district/tx/houston. At the top of the page is a link to
Coronavirus (COVID-19): Relief Options and Additional Resources where you can
find lenders at https://www.sba.gov/funding-programs/loans.
Mitchell then asked a question regarding
applications for EIDL loans. Jeffcoat said that the SBA will quickly notify
those who have applied for the loan that their application has been received
and will provide an application number. (Editor’s Note: As of April 10th,
the EIDL Program was out of funds.)
The SBA also has an Express Bridge Loan
Pilot Program allowing small businesses that currently have a business
relationship with an SBA Express Lender to access up to $25,000 quickly. These
loans can provide vital economic support to small businesses to help overcome
the temporary loss of revenue they are experiencing to bridge the gap while
applying for a direct SBA EIDL.
Spence questioned Jeffcoat regarding the
timeline involved from the completion of a loan application to the receipt of
funds. Jeffcoat replied that the timeline differs from lender to lender
depending upon which process is used. It can be as little as a few days, but he
said it’s difficult to be more specific due to the process employed.
Mitchell closed by thanking Sen. Cornyn and Jay Guerreo for their
efforts in setting up the meeting, Tim Jeffcoat for his expertise, the BAHEP
members who listened in on the meeting and asked questions, and finally to
healthcare workers across the nation who are doing such an amazing job.
(The video of the meeting is shown below. To view the video on full screen, click on the white headline.)