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>> joining us live from montclair, new jersey, is the editor at large of inc. magazine talking.com and we are about the paycheck protection program. thank you for joining us. explain the paycheck protection program and give us this day's report on the new law? now there isht money available for businesses who need it. that allows them to get a loan backed by the fda that will allow you to pay your employees, potentially, while your business is closed. the first round of the money for the program was 349 billion dollars and it ran out after just under two weeks, about 13 days. the second round of money, we believe there is $100 billion left.

a lot of people think the program is over, but for business owners for whom this is a good solution for keeping employees on, there is money still available and they should apply. host: what did you learn about part one of the program? what needed improvement? guest: a lot of dissatisfaction a lot of dissatisfaction was centered on the way it was executed, a come first serve program -- a first-come first-served program. but the banks decided they would focus on their customers first, which on the face of it makes sense. they focused on customers with whom they had deep relationships. that meant the largest customers got money first, and some smaller businesses are those who didn't have a steady relationship with a bank, were

not able to get money from the first program. sba also had a difficult the handling demand, and rules of the program were intentionally written so that a larger number of companies than normally qualify for sba programs could apply, but that wrapped in large public companies that should not have gotten the money. those are some of the problems with the first round. now that people have had more time to look at the program, they are realizing there is trouble with the design. that is what some more recent legislation is trying to fix. guest is the editor up large at inc. magazine and has held the program -- has held the position since 2011. if you are a small business owner, call this number, (202)

748-8000. if you are employed at a small business, call (202) 748-8001. (202) 748-8002. we are talking about the paycheck protection program, now in phase two has members of congress consider changes. before we get to calls, we want to look at some dialogue from the senate floor as they headed out of session trying to make changes they ultimately did did not. here is how it played out. >> specifically, the paycheck protection program extension act would do the following. it would allow borrowers 16 weeks to use their loan funds, instead of eight weeks. small businesses could use the period that they believe works

best to coincide with the reopening of the local economy. so some small businesses took the loans very early, thinking the shutdowns would not last, or that the pandemic would be on is way down by now, which is is in some states, but not all. this builds in more flexibility, 16 weeks to use the loan fund instead of eight. deadlinet extends the to apply for a ppe loan from june 30 to december 31. fact thatcts the shutdowns lasted longer in every we anticipated when

we were drafting the bill lee in march. bail would allow borrowers to use loan funds to purchase personal protective and tont for employees, pay for adaptive investments needed to reopen safely. : that is senator collins laying out the details, but give us a sense of where congress is headed? no action was taken by the end of last week. , it waseah disappointing not to see this go through last week. it is important to understand that, no matter if it is in this bill or the heroes bill, there is broad bipartisan agreement this needs to be changed. right now you have eight weeks from the time you get your money to use that. keep your you can

employees on payroll for eight weeks. the idea was a bridge to reopening. now, [inaudible] and she mentioned some people got the money early. that wasn't necessarily their choice. there was wide agreement with the first money that it was going to run out, so it was a race for people to get it while it was available. another part that didn't come up in that clip that there is bipartisan agreement on is this requirement that you need to spend 75% of the money on payroll, at a time when a lot of businesses are having trouble getting employees back, or don't want to pay employees to do nothing if they will then not have the money to pay them when they reopen, that 75% hurdle is looking difficult to clear. that is not something that requires congressional action. the treasury could do it. they are the ones that implemented the rule.

but they nice -- but they see no sign of wanting to change it. those of the things business owners have had most trouble with, the eight weeks to use the money in the 75% requirement. there is broad, bipartisan report -- support unchanging both of them. the problem is, the earliest companies getting the money are close to the end of the eight weeks, so whether they have been able to use that money in the way stipulated to the law, they need clarity. like to see this changed as after the break. if it doesn't change, at least people have clarity. it will probably mean, however, that the second month of money will not go out as quickly, because people will realize they cannot use it as intended. t: victor from alabama, you are on the line. good morning.

caller: good morning. victor, you are on live with kimberly, we are talking about the paycheck protection program. professor wood: i just -- -- talked to a young lady who said i would be next in line. pedro: you are here. ok.er: let me turn the tv down. i have one question. it is so -- is it going to be ok for people to pay back money that they have already earned? i understand where you are i understand where you are coming from about paying the but [inaudible] how are they supposed to come out if they have to pay it back?

thank you. you bring up a great point, victor, which is that if a business uses 75 percent of the money to pay employees, and a few other allowed the remaining 25%, then the loan can be forgiven. wereis the reason people stampeding to get the loans when they became available. important tot is small businesses, the reason you mentioned, many are concerned if they don't use it in the eight weeks or don't you 75% of a table, they will not be able to get forgiven. and most are not in a position to take on more debt, even though it would be a two year loan at 1%. they need loan forgiveness. so it is important that these rules are written or the legislation changed. you are right. they are in a whole, and having more debt is not going to help. it needs to be forgiven to make

.t worthwhile pedro: business owners can pay themselves with these funds? are there restrictions? yes, you have to pay everyone essentially what you have paid them in an eight week period last year. you can't if everybody credible raises. you can't prepay expenses to get them into the eight weeks. the spirit of the law, the idea is for you to pay yourself what you would have been making if this had not happened meant to figure that out you use information from last year and you are allowed to use it for yourself and your employees. and again, if you are a 1099 contractor or are self-employed, you can use this. if you are in a partnership, talk to your accountant, it is more complicated but you can use it.

not-for-profit's, it is available to a large number of might have a question, i'm not into typical business, can i pay myself? you can. pedro: might it be used for other forms of compensation is what -- host -- host: might it be used for other compensation? yes, a reasonable amount of hazard pay if you have essential workers, other types the employer's, the zero health insurance, commissions -- the employer's share of health insurance, commissions. host: small business owner john from new york city, good morning. i have owned a company

since 2013. i file my llc taxes every year. through a charles schwab bank. charles schwab doesn't accept applications. i went to my only other bank where i have a personal account, citibank, and citibank told me i could not submit the application because it didn't have a business account -- because i didn't have a business account. so i have no way to apply. person, mr.he sba hunt, while back, i wrote to him, called him, didn't your word. tried calling my senator, a whole process which i going to try to do to see if they can help me. i would like to know where i can apply. this is another problem with the program,?

-- with the program. a lot of banks are no longer accepting application because they have to determine forgiveness and don't want to go through that process. so i would go to a community bank and ask if they are accepting application. if not, a number of online lenders are. we have a list on our website, but we have heard of people getting loans, quicken, paypal, cabbage, they are doing a lot of loans, especially for smaller companies, and they are set upi would encourage you to k for online lenders. some are lending money themselves. some are in partnership with a bank. some of them have been approved by the fda. i think it will go faster and

you will get more transparency if you go with someone who has been approved themselves, but from the beginning, the online lenders to to be involved in this. at the later stages, they are proving important. i hope you will be able to get the loan you need. host: you have written that many fitness understood not understand if they are eligible. what would you tell those folks? guest: i would tell those folks they probably are eligible. . the law has been written broadly. there are lots of businesses who would not normally be eligible for sba backed programs and they are eligible for this one. 1099 employees and contractors, sole proprietors, you only had to have payroll last year. you did not have to be profitable when the banks are the online lender in the sda -- sba looks of these applications, it is not like a traditional loan.

the idea is that it will be forgiven. they need to know that you legitimately can pay employees with this loan. no matter how small your business is, you should take a. look at it franchisees are often not eligible. they are eligible under this program. same for small nonprofits. it is very broad. especially forso the smaller companies and partnerships who thought they were not eligible, that is a reason there is still money left. host: let's get back to calls. jim is a small business owner in leesburg, florida. what work do you do? caller: thank you for having my call. my wife is a nurse practitioner. we have a virtual practice on phone. she responds to people with virtual care. -- i am not that hearing you. host: just keep going and you

will be able to hear our guest. caller: ok. question i have -- i am also the president of our local eagles club. we are a 501(c) eight. the bank has told us we are not eligible for the protection plan because we rca -- we are c eight. i do not know why we are not eligible for the c eight. the bank told us we are not eligible. i sent a letter to rick scott, our senator here. he said he is looking into it, but i've not heard anymore back. host: what would you tell jim? guest: my understanding right now is his bank is correct. it is only the c three. in the heroes act, they are looking to expand to c sixes.

i would call your representative because they are very conscious of the fact they have left out a number of not-for-profit by only limiting it to c3. that is something that is under discussion. for now, i think there is correct. host: what else can you tell us about the heroes act? what else would it do to the paycheck protection program? it would change the amount of time you have to use the money, which is huge. it would change the percentage you need to use on payroll. it would also extend it, which is interesting. the last application was supposed to be june 30. now it would go to december 31. it implies there would be money left, which no one expected. right now if your loan is not especially is not forgiving, you need to pay it back within two years. the heroes act would extend that potentially to five.

this is a little bit in the weeds, but if you keep your employees on, you can get a rick -- can get employee retention credit. if you get a ppp loan, you cannot get the employee retention tax credit. they would change that so you get both at the same time. you could potentially get both at the same time. it would also try to carve out money specifically for businesses with fewer than 10 employees, specifically for not-for-profit and also for underrepresented unities. those are some of the things specific to the paycheck protection program. it will all be negotiated before any of this comes to light. host: let's go to ron in fort lauderdale. what kind of business do you own? caller: i have a membership service where we try to encourage people to use cash regenerate would activity into the economy.

up,way that the ppp is set one would have to certify they have an employee. what about companies that are trying to offset the problems and try to help the country? willu know if the ppp offset those who are interested in hiring people? we would like to hire like 200 people. thank you. guest: that is a good question. i do not know. the ppp is looking at preserving the employment levels you already have. there is talk of some sort of hiring incentive in the next round in the senate. at this point, i am not really sure how that would work under ppp. it is really looking at preserving the payroll you have now. host: let's go to shall be in tennessee. c-span.hi, happy memorial day weekend.

, in my local area, a lot of businesses have what i --l host: keep going if you can. caller: a lot of businesses in my area are between a hard rock -- a rock and a hard place. yes, -- i agree with the male that says, how are they going to pay back into hiring back their employees? out good. been worked hard decision, responsibility

for all of them. host: thank you. is there anything there that shall be saved and can respond to? guest: she has corrected has not been worked out well. the law and the guidance we have now is if they use 75% of that money toward paychecks, they will not have to pay back because congress understood these businesses have been hit hard by this. many of them do not have good choices. they do not necessarily want them to go further into debt. if they can pay 75% of the money they have got from the loan, the other 25% can go to rent, utilities or interest on a mortgage. they will not have to pay it back. that is why so many businesses were interested in the program. host: what has been the between unemployment benefits and money being received through this ppp? it took a little while for the ppp to come into play.

explain how that has worked for the average worker. caller: this has been -- guest: this has been very complicated. for business owners, the ppp, the potential to turn this into an alternate source of income when the business is closed. for workers, many have the option of a much more generous unemployment package than they used to have. owners gives business the power to hire workers back. we saw a study that said something like 68% of people who are eligible for unemployment are getting more unemployment than they would get if their business could hire them back. they are getting more unemployment than they were making before. for business owners, it is very difficult to figure out what to do because some of their employees would be better off on unemployment. the problem is unemployment does not last forever.

a lot of business owners who are able to offer health insurance when their employees to be able to keep that. on unemployment, you generally cannot. if it is a short-term furlough, some business owners are working with their insurance brokers to keep people on. that is an important piece of this. host: let's hear from michael. michael is in cleveland. tell us about your business and tell us what your comment or question is from our guest. caller: yes, good morning. ohio as essential because we are in the automotive business. it is a small operation, two full times in three-part times. i am not sure -- we do receive the loan. i am not sure how they formulated that based off of our 941's for the past year. of -- the labor cost that gross and 940

and 941 and state employment and workmen's comp. all included in that cost? guest: thank you. in general, that is your 941. it can also be health insurance and a few other benefits. i do not believe it is workers comp. amount in that definition of pay. it is not everything. it is a little tricky because you get an amount based on two and a half months of payroll, but then you only have eight weeks to use it as opposed to 10 weeks you got it based on. i know that is confusing. it is one of the reasons they are looking to extend the time period. host: mike is in madison heights, virginia.

tell us who you work for, what you do and what your question is. caller: i work for a construction company. my question is, these small businesses that got these loans to pay the employees -- what do you do with the companies that are still working, that are still charging customers? would that not be double dipping for the companies to still be performing work? you still see the remodels out. you still see the construction companies charging customers, but the employees, some are only getting $25 a week and cannot draw out of unemployment like they are supposed to. host: good question. ok, in order to get the money, the company has to certify they need it. that has been very confusing

because no one knew exactly how desperate you had to be to say you needed the money. people were worried if they had a line of credit, could they get the money? said ifen, treasury has you got less than $2 million, you are assumed to be acting in good faith. there are some states who have something called workshare who although both unemployment and pay. it is unemployment for reduced hours as it were. it is true that the business owner could potentially getting some revenue while also getting help from the ppp to pay payroll. many businesses are not going at full clip even if they are open. ayroll is typically business's second biggest expense. there is the cost of overhead and supplies. tohough the ppp is crucial

paying the payroll, it is not the only thing the business has to pay for. they do have to certify there is a need for it. treasury has been active in saying they will be investigating where they think there was not a need. sba, for folks who are running businesses who want to take part in this program, how is the sba performing right now? are they big enough to handle all of these requests coming on? guest: i think now it is working fairly well. in the first month where there was that rush of companies, the sba was asked to approve in two weeks something like 20 times the number of loans they normally do in a year. you can imagine how that worked. provideuses a system to origination numbers. it was routinely overwhelmed. the short answer is they are nowhere near big enough.

the long answer is somehow they did it. they got through the first two weeks. it seems to be working relatively well. host: looking you tell us about lending banks and their involvement? are they getting what you might consider the regular fees by being part of this process? guest: the banks also have been overwhelmed. they only at the beginning wanted to work with their existing customers. on loans up to $350,000, they make a 5% fee, which sounds generous, but the average loan about $200,000. now it has come down to 37 thousand dollars. a lot of loans in the past week, we're looking at about $17,000. they are making about $850, originating that loan and they are going to have to figure out the forgiveness on the other end. if they are doing an million dollars loan, it may take the

same. amount of work for them they are going to make 1% on that and come out a lot better. theirnks to work with larger clients, it works out quite well for them. even though the percentages are lower. for smaller clients, it is not clear they are doing well on this. it is a lot of work for them. this is hard to say because the banks were essentially entrusted with running a relief program for which they were also unprepared. i think that is part of the dissatisfaction around the able mentation that it was either not fair or done well and a lot of that is true. the scope of this and the speed of this was really unprecedented. i think it is part of the reason there is so much more money left. the loan sizes are going down. people understand that this will work for them. everyone is able to handle it in an orderly fashion. host: thomas, port orange,

florida. tell us your situation and your question. caller: my wife and i operate a business that contracts with office supplies. actually 1099are contractors. -- and we get paid by the package. right now, we are delivering very few packages. we drive just as many miles. the guys work just as many hours, but because they are 1099, i do not qualify for anybody from the ppp program. if i was to shut my business could applytractors by themselves under the ppp. but they are not going to lose my contract. all of my trucks will sit there and the bank will repossess them. i feel like i'm falling into a gap. guest: there is somewhat of a

or, but if your employees -- if those 1099s are making less, we do not have to lay them off or fired them for them to get some sort of compensation. if they can certify they are making less and they have been hurt by this, they can apply for the ppp on their own which is new in this program. it has been confusing for a lot of people because normally you think of that is your cost and you would apply on their behalf. the way it works for this one is they apply. they do not have to have zero income to apply for it. they do have to make it through the paperwork and the loan application process, which is very streamlined, but it still is a bit of a hurdle. host: patrick is in bardstown, kentucky. good morning to you. caller: good morning. i was curious if there is a second stimulus and if congress has passed a bill yet.

tell a little more about the state of play on the hill. guest: i think he is referring to the heroes act. maybe july 4 we will see something. we do not really know the crux of the negotiation. it seems to be over unemployment because it is historically very generous. the heroes act would continue the $600 a week and handsome to unemployment -- a week and handsome to unemployment. it is not going to happen in the next couple weeks. host: should ask you about oversight. who has direct oversight? guest: this comes from treasury. at the beginning of this program when they discovered that some public companies had taken these out, they were talking about investigations. they have been very vocal they are going to be looking at the

larger. loans a weekend a half -- larger loans. we can a half ago, they said if you had a loan of less than $2 million, you are thought to be acting in good faith. it will be treasury and the irs. host: let's hear from judith in florida. caller: good morning. my question is i am in the catering business, which we have been completely shut down since the end of march. beenve not been out -- not allowed to have wedding, events. we are still out of business. people are scared and they are still canceling. i am the owner of the business. i am not essentially on the payroll. all i do is take a drawl at the end of the month to pay my bills. we did receive the loan, thank you. i am paying the employees to keep them on staff. i have been told by my

accountant i'm not allowed to take one penny from myself. at this point, i am totally in mess. trying to take a loan so i can pay my mortgage and pay my bills. three months now with totally no income. is that correct or am i allowed to take something for myself? host: what would you tell judith? guest: i would tell her i am not an accountant, but i have spoken to many accountants who say if you take that draw on a k-1 form , that you should be able to pay yourself back. i am sure your accountant has seen you through a lot of difficult times. i would go back and check and get a second opinion. host: let's get it on the line from new jersey -- let's get ed on the line from new jersey. caller: i have a small consulting business. i did not start the business until early this year. heard the lady speaking saying it was based

upon last year's income you are paying people. host: can you verify? guest: it depends on the exact date. i would check into that. if you started last year, you would be eligible. i think it is into the very beginning of this year technically. if you started in january, you're going to be ok. if you started in march, i am not so sure. host: joe from staten island, new york. caller: good morning shared how are you guys doing? i am calling -- good morning. how are you guys doing? let's say people applied for the sba loan and the people getting their money to take care of their workers -- these workers, let's say are there people also filing for unemployment and getting the money for their work and also filing for unemployment

and not doing the right thing? is that happening? guest: just like the banks who are trying -- the unemployment offices are also overwhelmed. that is illegal. ppp or it is through something else, you are not able to get unemployment. the exception would be if your hours were cut and you are getting less. in some states, you can get a little bit of unemployment for those hours. if you are getting paid through ppp and anything else, you can also knock it unemployment generally. host: as we wrap this up, what should small business employees and owners be thinking about the future of this program? guest: it looks like there will be money left for quite a while. at the beginning, people were rushing to get it. i would take a hard look at it. i would look at when you think you might be able to reopen and

at what level can you make money if you have a reduced headcount in your restaurant? do some projections. see if you can repay the money the way it is intended. if so, you should be able to get it. you may be able to go to an online lender if your bank is no longer participating. it does look like there will be money for people who need it. i would encourage them to look into it. host: kimberly weisul's editor at large at ink magazine. appreciate your time. guest: my pleasure. thank you so much. [captioning performed by the national captioning institute, which is responsible for its caption content and accuracy. visit ncicap.org] [captions copyright national cable satellite corp. 2020]

[no audio] >> way george washington university, a professor at the school of public policy and administration. we thank you for joining us this morning. guest: i am delighted to be here. host: it is academic, but let's start off with the role of inspector general. what is an inspector general? guest: one of the best parts of what is going on now is most people have no idea what the

inspector general is. it is a unique role that was established during the 1970's in ,esponse to financial issues perceptions of financial mismanagement in executive agencies by congress. a series of walls were passed -- of laws were passed to reduce waste. is -- the notion abuse wasd, waste and one aspect. they are also supposed to look at the economy efficiency of several agencies. look at -- there are basically three different functions they fulfill in agencies. one that has been getting all

the press is investigation. that is looking at wrongdoing. building cases they send to the department of justice. the second is financial auditing. the actualig part of motivation for the act in the beginning. for example, finding better use funds. finding ways to improve internal controls to improve financial management. the third is looking at program improvement for economy and efficiency. the efficiency and effectiveness of programs. there are literally separate units within each inspector general. investigators are the ones that look for potential wrongdoing, follow up on whistleblowers to come in through hotlines. hotlines go to inspector general spring in hundreds of issues. there needs to be a vetting process to figure out which are the most serious to look at. about theunique thing

inspector general is it is nested in the shared powers of our constitution. the congress and the president appoint forility to the three dozen or so that are senate confirmed to ensure they have adequate resources and to ensure the agencies follow-up and recommendation. literally thousands of recommendations are made to improve agencies each year by inspector general. somebody needs to implement that. and so, the inspector agencies shouldn have the institutional presence, knowledge to work with the other people in the agency that need to actually implement the recommendations to make improvements. host: the role itself -- if someone is appointed as an

inspector general, is that a partisan wall? guest: absolutely not. that was a key aspect of this unusual shared powers that the ig's are responsible to both their agency head as well as the congress concurrently. there were reports go from the website to vote. they have two masters. that is why people talk about how they walk the barbed wire fence between the two masters. the act specifically says the person to be appointed needs to have specific skills and experience in financial management, law and public administration. everything that has been both in the law and has been written about them, it is clear it is a nonpartisan, non-politically motivated kind of position.