With many small business owners in danger of running out of cash as their businesses remain closed in the coronavirus crisis, fintech companies are lobbying to disperse government relief funds to them.
Some say that using the digital platforms they have developed to lend money and process payrolls will be quicker than going through traditional Small Business Administration (SBA) procedures for disaster relief.
The current hotly debated Republican economic relief package bill, under which the SBA would disseminate aid to small businesses, along with relief to workers and big companies, gives the agency 30 days to determine relevant rules before it starts accepting applications for capital. Many in the small business community say that by that point, many businesses, particularly very small ones with inadequate cash reserves and no money coming in, will already have closed.
The American Institute of CPAs (AICPA), the International Franchise Association, payroll processor Paychex and accounting software provider Intuit, issued an open letter to President Trump, U.S. Treasury Secretary Steven Mnuchin, Small Business Administrator Jovita Carranza and members of Congress today that called for the government to disperse funds to employer businesses through existing payroll processors.
“We urge the federal government to use these existing systems to direct funds to small businesses so they can make payroll and not shut down due to restrictions caused by the pandemic,” they said in a statement. “In this scenario, the federal government could set up a central payroll funding account that small business payroll processors could utilize so that millions of small businesses could continue paying workers during this time of crisis.”
However, as the group noted, this help would apply only to employers. The vast majority of all small businesses are nonemployer firms, meaning they are solo firms or partnerships that have no employees on payroll.