Florida Senator Marco Rubio joins Yahoo Finance's Jessica Smith to discuss the Cares Act and how the United States has changed in the 1 year since it passed.

Video Transcript

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JESSICA SMITH: Welcome to Yahoo Finance Presents. I'm Jessica Smith. Joining me now is Senator Marco Rubio, Republican from Florida. Senator, thanks so much for joining us.

MARCO RUBIO: Thank you.

JESSICA SMITH: We are coming up on one year since the CARES Act was signed into law. At the time, you were chairman of the Small Business Committee, played a key role in crafting the Paycheck Protection Program. At that time, when you were negotiating that, when you were talking about this, did you ever imagine that a year later, people would still be applying for these loans, relying on these loans?

MARCO RUBIO: Well, we didn't know what to imagine. I mean, it was an unprecedented time of tremendous uncertainty. I remember the feeling around here was that we were in a race against time. We didn't know when the virus would strike Capitol Hill. We didn't know there would come a point where we wouldn't have enough members in the Senate because of quarantine or illness to be able to get anything done.

And there was not a lot of certainty about how long businesses were going to find themselves under these restrictions. So we were operating under that sort of environment and with the need to create something that had never existed before.

And that is, you know, how do we help small businesses sort of survive and float above water and for employees to remain-- for as many employees as possible to remain attached to their work because the idea of millions of people just being turned on the unemployment system beyond what we already saw was unimaginable. It would be-- I thought it would be catastrophic. I didn't think the system could handle it. And I think we were right.

JESSICA SMITH: I mean, when you were having these talks, did you ever have a moment where you thought, man, this isn't going to work. This is going to fall apart. The program has such bipartisan support now. But I'm wondering when you had those negotiations, was it always that way?

MARCO RUBIO: Well, there was-- I think there was-- here's the good news. We had begun to work on this by late January or early February. In that sense, we saw that there might be some business disruptions in the US as a result of this disease disrupting supply chain, disrupting the global economy, and that somehow impacting the United States. And so we started thinking, how can we give small business access to capital, to loans, but with interest rates and the like?

So we started the general outlines of this. When the shutdown started in March, it became apparent that we would have to go much further than that. This would have to become a direct assistance program. And we wanted to tie it to work. So the good news is we had the existing 7A program, which sort of gave us the framework of how we would distribute it, the notion that we would use the existing emergency loans of the SBA that we use after a hurricane or earthquake.

That wasn't going to work. I mean, setting up a bunch of government tents and trying to get the government-- the SBA is not big enough. And we don't have any agency in government that coud have processed that. So we had the existing 7A system. And everybody kind of bought into that. So I think there was a combination of urgency, and frankly, good partners to work with that allowed us to move on this.

So it was by far the most popular provision in the CARES Act, the one that I think had the most support and that we probably could have passed as its own bill within a week of starting work on it.

JESSICA SMITH: Is there anything you would do differently if you had the chance to do it over again?

MARCO RUBIO: Well, that's a tough thing to say. I mean, today I think there are things that we continue to finetune in the program. But back at that time, the biggest challenge we had was how do we onboard new lenders? We knew we would need more lenders.

And so I think one of the things that I think, had we had a chance to do it differently, would be to figure out a way to more quickly get new lenders into the system-- in essence, preapprove, get SBA working. Because they didn't need for us to pass a bill for them to start working on improving and onboarding new lenders, new entities that could begin to process these loans or these grants, which is what they became, in many cases.

So I think that's something that in hindsight, we knew we needed to do because one of the things we didn't foresee was that a lot of the larger banks would obviously handle commercial clients through the commercial lending division. But their small business clients were being handled through their business accounts and that-- the volume there just-- they didn't prioritize it, and that really became a bottleneck early in the first days-- the first weeks of the initial program.

JESSICA SMITH: One thing I've wondered about is, looking back at the CARES Act overall, we heard from Leader McConnell and others in the Republican Party saying to wait before starting on another bill. And then Republicans didn't introduce their own bill until just shortly before the program was set to expire and hence unemployment benefits were set to expire. Was that a mistake to wait that long to really start negotiating in earnest on that?

MARCO RUBIO: You're talking about the one that passed in December?

JESSICA SMITH: I'm talking about the summer--

MARCO RUBIO: Oh.

JESSICA SMITH: --after.

MARCO RUBIO: Yeah. Well, a couple of things. I mean, if you recall, the Paycheck Protection program was actually extended a couple of times. There was actually additional money put into it by unanimous vote. And then it was extended again through August through unanimous vote. So Paycheck Protection kept moving forward. I think the challenge with the second act or the second assistant support was really a couple of things.

And that number one was the dollar figure, right? I mean, the Republicans had sort of a set number that they wanted to target their relief to. And Democrats were insisting on a package that was double that size. And that was the Democrats' position until after the election. Only in December did Speaker Pelosi come off that.

And what we ended up passing at the end of the day in late December-- again, bipartisan, the president signed it-- was a bill that was very-- was certainly in the same neighborhood as what Republicans had initially offered right before the August recess. So I think there was some political calculation there that was made by the Democrats. I said so at the time. I'm glad we finally got something done in December. But sure, I mean, it would've been better to do it in September.

JESSICA SMITH: Now President Biden now has made some changes to the Paycheck Protection Program, caused some confusion. We've heard from some problems from banks. One of the changes is for sole proprietors. Do you think that change should be made retroactive?

MARCO RUBIO: Well, I mean, like anything else, I mean, if you make a change in the program on eligibility, I think it's unfair to the people who, at one time, applied and were denied. And then, obviously, they could reapply, but I think part of it is, can they go back and recoup the cost that they didn't have at the time? Look, that cost money. I think at the end of the day, the calculation there needs to be how much money was appropriated for the program because every dollar you spend retroactive is a dollar that's not going to be available for future assistance down the road.

Now we didn't make the first phase of PPP retroactive in December. So a lot of people or entities are able to go back and apply. But any time you make changes to this program and adjustments, there's-- banks and lenders are going to claim that there's a lot of confusion involved in it. And that's inevitable, but it would be worse to not make the changes.

I think that the bigger challenge has been, frankly, changes to which entities, how they define who is eligible, and expanding eligibility beyond what Congress intended, is what that begins to do is it begins to create partisan fissures over the program for a program that's had broad bipartisan support. And I think it also, as I said, begins to drain away the revenue. The dollars that were put forward for this second phase of PPP were designed on that eligibility criteria. The more you add to that eligibility criteria outside of what Congress intended, you're going to run out of money.

JESSICA SMITH: All right, senator, we'll have to leave it there. Thanks so much for joining us today. We hope you come back to talk to us again soon.

MARCO RUBIO: Absolutely, thank you.