Velázquez Explores Issues Within Paycheck Protection Program and Loan Forgiveness Process
Washington, June 17, 2020
Washington, D.C.— Today, the House Small Business Committee under Chairwoman Nydia M. Velázquez (D-NY) hosted a virtual hearing assessing issues that have emerged during the implementation of the Paycheck Protection Program (PPP). The hearing gathered small business owners, lenders, and researchers to examine what has and hasn’t worked under the program and what Congress can do to optimize PPP.
“As members of the Small Business Committee, we are tasked with assessing areas for improvement in all of SBA’s programs, and the first round of Paycheck Protection Program funding exposed some of those areas,” said Chairwoman Velázquez. “We must listen to the concerns that we hear from small businesses across the country, and work to improve this program so it is more accessible and better meets the needs of Main Street.”
Congress established PPP under the CARES Act to help small businesses meet payroll costs and other expenses. However, throughout the implementation of the program, numerous issues have emerged that impact the ability of both lenders and borrowers to access relief. During the hearing, witnesses outlined various areas for improvement within the program, including more explicit rules, clearer guidance around loan forgiveness, and more accessibility for minority-owned and other underserved businesses.
“One struggle that affects not only seasonal businesses, but all businesses that accepted a PPP loan, is the ever-changing rules and guidance,” said Melissa Kelly, Executive Chef and Proprietor of Primo in Rockland, ME. “There have been multiple changes as to the interest rate, the term, the calculation period. Businesses prosper on certainty. Budgeting sales, staffing, and purchasing accurately require a fair amount of certainty. To accurately project future cash flows, it would be very beneficial for all businesses to know how much of their PPP loan will be forgiven and more importantly, how much will not be forgiven and what the monthly loan payment will be.”
“Some of our clients have fled from the program out of fear. Many are confused about how to follow the rules that keep changing,” said Eduardo Sosa, SBA Lending Vice President at Amarillo National Bank in Austin, Texas. “As an institution, we are just as concerned that the guidelines today will not be the guidelines tomorrow because that is exactly what has happened since the very start of this program—and that negatively affects the bank and our borrowers.
“To date, SBA has already spent more through the PPP program than through all of its lending over the past three decades,” said Ashley Harrington, Federal Advocacy Director and Senior Counsel, Center for Responsible Lending. “As one of the largest government small business programs ever and a key component of the federal government’s pandemic relief program, it is imperative that the funding and benefits are distributed equitably and that communities are not left out of our relief and recovery going forward.”
To watch the full hearing, click here.