Commentary
Extending Stimulus Plan To More Publishers Is Necessary Amid Pandemic
- by December 24, 2020
Congress this week passed a $900 billion pandemic aid billthat includes some goodies for more news
publishers. While it's unfortunate that any business would need pandemic aid, the lifeline can help news organizations recover from the worst economic collapse since the Great Depression.
As of this writing, it's not clear whether President Trump will approve the 5,600-page bill that no one has had time to read. He posted a video on Twitter asking Congress to boost direct payments to individuals instead of larding up the bill with funding for pet projects that have nothing to do with COVID-19 relief. Congress has enough votes to overcome a presidential veto, if necessary.
The bill allows local newspapers owned by national chains to apply for forgivable loans from the Small Business Administration's Paycheck Protection Program (PPP). When the program was
first enacted as part of a pandemic relief package in March, the ownership structure of those newspapers made them ineligible to apply for loans as separate businesses.
The
program had provided companies with no more than 500 employees a way to obtain short-term financing to continue operating. The loans were forgivable for businesses that could show that they had spent
the funds on necessities, such as payroll, utilities and rent. Borrowers were given as many as five years to pay back any part of the loan that wasn't forgiven.
The News Media
Alliance, a trade organization that represents more than 2,000 news organizations in the U.S., applauded Congress for granting a waiver to previously ineligible news publishers to apply for PPP loans
as separate organizations.
“These SBA loans will allow news publishers to continue to bring critical news and information to their local communities, particularly at
this time of historic challenges,” David Chavern, president of the alliance, stated.
In the first round of the PPP, about 2,800 U.S. newspaper companies were among the
5.2 million businesses that received loans, according to an analysis by Pew Research
Center. Those companies had employed 40,000 people at the time the loans were granted.
Those publishers would be eligible to apply for PPP2, as some are calling the new
program, though it has stricter rules on loan forgiveness. For example, a business needs to show that its revenue fell by 25% during any quarter of 2020 from a year earlier, among other
requirements.
Unfortunately, many local newspapers are likely to experience continued financial pain as the economy hobbles along and advertisers in key industry categories
like retail, entertainment, automotive and real estate remain selective about their media spending.
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