June 10, 2020

Warren, Smith, Rosen, Casey, Clark Urge SBA and Treasury to Ensure Child Care Small Businesses Have Access to PPP Benefits

SBA has a responsibility to work with banks, credit unions, and other partners to ensure that child care providers survive this crisis and are ready to support families when the economy begins to reopen.

Text of Letter (PDF)

Washington, DC - United States Senators Elizabeth Warren (D-Mass.), Tina Smith (D-Minn.), Jacky Rosen (D-Nev.), Robert Casey (D-Penn.), and Representative Katherine Clark (D-Mass.) sent a letter to the Small Business Administration (SBA) and the Department of Treasury urging the agencies to issue clear and timely guidance to child care providers and to the nation's banks administering the Paycheck Protection Program (PPP) to ensure that child care small businesses can access benefits available under the Coronavirus Aid, Relief, and Economic Security (CARES) Act and the Paycheck Protection Program and Health Care Enhancement Act.

"Child care providers are the backbones of their communities and have been deeply impacted by this public health crisis. We have heard from child care providers in our states that they are facing significant obstacles to accessing the small business benefits created by the CARES Act, and we are deeply concerned that without additional support and guidance, many child care programs will face permanent closures," the lawmakers wrote

Child care providers face significant obstacles to obtaining these funds. Many child care programs, especially family child care providers, are sole proprietors that may not have formal business relationships with banks. Many banks are only accepting applications from their existing customers, and some banks are limiting eligibility to their business clients, which may exclude child care providers who operate under personal accounts. Family child care providers are experiencing high rates of denials in their PPP applications; one survey of providers found that only 27% of family child care homes were approved for PPP loans, even among those who were already clients of their bank.

The coronavirus pandemic has highlighted the exceptionally important role that child care providers play in keeping children safe and promoting their healthy development while their parents work. It has also underlined the precarious financial situation that child care small businesses face. Between the high cost of offering quality care and the limited availability of subsidies, many providers operate with extremely thin margins and are also reluctant to take on loans. Even before the coronavirus pandemic, more than half of Americans lived in "child care deserts," neighborhoods without a sufficient supply of licensed care. Without federal support, the supply of quality child care is likely to become even more limited.

"Congress created the PPP, Economic Injury Disaster Loans (EIDL) Emergency Grants, and the other small business supports in the CARES Act for the purpose of keeping small businesses like child care programs afloat and ensuring those employers continue paying their workers as the coronavirus pandemic causes widespread curtailments of business," the lawmakers wrote. "The (SBA)has a responsibility to work with banks, credit unions, and other partners to help child care businesses access all available small business funds and maximize their likelihood of receiving loan forgiveness, in order to ensure that child care providers survive this crisis and are ready to support families when the economy begins to reopen."

The lawmakers have requested responses to their questions no later than June 24, 2020.

During the COVID-19 pandemic, Senator Warren has been working to stabilize the child care system, keep providers in business, and ensure parents are able to go back to work when it is safe to return. She and Senator Smith sent a letter to Senate leadership on March 21 and published a Medium post about their plan for a $50 billion child care bailout on April 15. On April 29, Senators Warren and Smith led 29 of their Senate colleagues in calling on Senate leadership to include their plan for a $50 billion child care bailout in the next coronavirus relief package. On May 27, Senators Warren, Smith, Patty Murray (D-Wash.), Representatives Rosa DeLauro (D-Conn.) and Bobby Scott (D-Va.) introduced the Child Care is Essential Act to create a $50 billion Child Care Stabilization Fund within the existing Child Care and Development Block Grant program.