During the COVID-19 pandemic, Washington ordered businesses to close. It then lent many of those businesses money to survive the closures. Six years later, the government wants its money back — even from business owners who never recovered.
These were not ordinary business loans taken during ordinary economic circumstances. Government closure and operating restrictions intensified the economic emergency for affected businesses.
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I know what this looks like because I am one of those borrowers. I spent decades building businesses, creating jobs, paying taxes, and serving our communities.
When COVID-19 restrictions devastated those businesses, the Small Business Administration’s Emergency Injury Disaster Loans and the Paycheck Protection Act were not a windfall. They were a matter of survival. PPP loans could be forgiven for qualifying expenditures. COVID-19 “EIDL loans” are not forgivable. In April of this year, the SBA announced it is escalating its pandemic loan collection efforts. The agency estimates that billions of dollars in relief funds were fraudulently distributed.
The government should aggressively pursue fraud and those who abused the pandemic programs. They should be prosecuted, and the money recovered. But don’t treat an honest small-business owner whose business was destroyed by COVID-19 like someone who stole from the government.
The SBA offered eligible COVID-19 EIDL borrowers temporary payment assistance — 50% payments for six months — but interest continues accruing, and the unpaid amount ultimately contributes to a larger balloon payment. The economic damage from COVID-19 lingers. Washington itself recognizes that many borrowers are still struggling six years later. If the economic consequences have persisted this long, perhaps temporary payment reductions aren’t enough.
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During the Biden administration, Washington spent years debating whether taxpayers should absorb student debt voluntarily incurred to finance an education. Surely Congress can at least consider relief for small business owners who borrowed after government orders closed or crippled their businesses. Congress should establish a hardship settlement program for legitimate, non-fraudulent COVID-19 EIDL borrowers, allowing partial or full forgiveness when repayment is demonstrably impossible.
The government cannot undo the damage caused by the pandemic or the decisions made in response to it. But it can stop compounding the damage by pursuing honest small-business owners for debts they incurred while trying to survive a crisis they did not create.
William Pollack has spent more than four decades owning and operating local radio stations, television stations, and movie theaters.
