Small businesses need help now, and Congress should extend the Paycheck Protection Program as a lifeline, Berkshire Hathaway Chairman and CEO Warren Buffett said Tuesday in an interview with CNBC.
The situation facing small businesses is “an economic war,” he said, noting that these firm have become “collateral damage” during the coronavirus pandemic.
“It’s an economic war and, and … when we went into World War II, a lot of industries were shut down and, and everything went over to the defense production,” Buffett said. “Well, we’ve shut down a lot of [businesses] in this particular induced recession, while others are prospering. The country owes it to millions of small-business people … to just renew the means of the PPP and get us to the end of the tunnel.”
The Berkshire Hathaway chief said larger companies, especially big food manufacturers, generally have done fine.
But the pandemic and closures “just killed the economics for somebody who may have been working decades … to build a business, reinvesting earnings to improve their establishment, and through no fault of their own the edict comes along that kills all their dreams,” he added.
Congress would be “foolish” to not get these businesses “back to where they were” before the pandemic and closures, Buffett explained.
No one really knew “how long this self-inflicted recession would last with this particular effect on small business,” he said, urging Congress to act on another injection of funds for these businesses.
The Oracle of Omaha’s interview came the morning after a bipartisan group of senators introduced a $908 billion coronavirus relief package, which includes $748 billion in jobless benefits and a second round of PPP loans for small businesses.
Contract With Big Businesses
When asked why big business leaders are speaking out on behalf of small companies, Buffett praised the Federal Reserve’s actions in March.
“Big business generally has done very well — maybe not the traveling and entertainment [companies], which still have difficulties — but the Fed did a terrific job. They saved us from something that would have been a lot worse than 2008-2009 when they acted in March,” Buffett said.
“So [for] large companies who in March were going to have no access to capital, the market just opened wide and corporate issuance was huge,” he said. Small businesses “received some help, but it’s not getting them to the end of the tunnel.”
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