As the effects of the coronavirus pandemic persist, policymakers were worried that the PPP might run out of funding like it had in late April, but borrowing from the program has seen a slight decline in recent weeks. Figures from the SBA last week showed the agency had approved more than $513 billion in loans since March. This week, that number fell to $511 billion.
Despite some signs of improvement, a study from the University of Illinois, Harvard Business School, Harvard University and the University of Chicago estimated that more than 100,000 small businesses have closed since the start of the coronavirus pandemic in March, now equaling the number of Americans who have died as a result of the disease.
According to Department of Labor figures released Thursday, 2.1 million people applied for unemployment insurance, raising the number of workers who have lost jobs to 42 million.
Small Business Investor Group Says Private Capital Could Alleviate COVID-19’s Knock-on Effects
The head of an industry group representing lower middle-market private equity funds told members of Congress that small businesses will need more flexibility in order to adapt to the new environment, which includes improving access to capital.
Brett Palmer, the president of the Small Business Investor Alliance, appeared before a virtual hearing of the Subcommittee on Investor Protection, Entrepreneurship, and Capital Markets on Tuesday. The hearing focused on the impact of the COVID-19 pandemic on capital markets, warning of the disease’s knock-on effects.
“We need to remember that we are only experiencing the first wave of impacts of this economic and biological disaster,” he said. “There will be second and third wave impacts that we know are coming and a whole lot more that we don’t yet see.”
Palmer said a part of the government’s response in the next year must include an update to regulations that create barriers to capital for small and medium-sized businesses, which could face high levels of debt and limited access to loans from banks as credit wears thin despite their viability—and hamstring job growth.
Additional flexibility for the Paycheck Protection Program was one of the suggestions Palmer made to lawmakers in addition to helping small businesses get access to private capital.
“Small businesses are going to need even more access to more patient capital or equity,” he said. “They’ll need access to both bank loans and private capital markets, from business development companies, small business investment companies, rural business investment companies and small private equity [firms].”
SEC Adopts Amendments to Improve Financial Disclosures about Acquisitions of Businesses
The Securities and Exchange Commission announced last week that it has voted to adopt amendments to its rules and forms to improve for investors the financial information about acquired or divested businesses, facilitate more timely access to capital, and reduce the complexity and costs to prepare the disclosure.
The amendments will update the agency’s rules, which have not been comprehensively addressed since their adoption more than 30 years ago.\
“This action, which is designed to enhance the quality of information that investors receive while eliminating unnecessary costs and burdens, will benefit investors, registrants and the market more generally,” SEC Chairman Jay Clayton said in a statement.
The amendments to the rules are intended to assist business development companies improve the financial disclosure requirements by altering some definitions and criteria.
The amendments will be effective on Jan. 1, but voluntary compliance will be permitted in advance of the effective date.
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May 29, 2020 at 12:07AM
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