“Secretary Mnuchin, Administrator Carranza, welcome to the Small Business Committee, and thank you for being here. Let me start by saying I want to give a sincere thank you to all the staff at both your agencies who have worked tirelessly over the last few months responding to this crisis.
“I am deeply appreciative of all their work, which helped support millions of American jobs in a moment of unprecedented uncertainty. These are extraordinary circumstances and I would like to paint a picture for you of the magnitude of the devastation that small businesses are going through right now.
“Back in March, it became clear that COVID-19 would tear through our communities, leaving almost no sector of our economy unscathed. And the hit on small businesses was in many cases deeper and grimmer than their larger counterparts.
“I have been on phone calls with small business owners in my district, who have been mainstays in the community for decades—who have lived through 9/11 and the Great Recession and are now holding back tears telling me that if we do not do more to fix PPP and find long-term solutions—that they cannot imagine their business—the source of income for themselves and their employees—to survive the COVID-19 pandemic. In fact, about 110,000 small businesses have already closed their doors permanently and an estimated 7.5 million additional firms are at risk for the same fate.
“And on top of all that—they turn on the news and see headlines like “Trump Friends and Family Cleared for Millions in Small Business Bailout” and “SBA exempted lawmakers, federal officials from ethics rules in $660 billion loan program.” Let me tell you—that is a gut-punch to the small businesses that this program was intended to serve. The ones that didn’t have the top-notch financial connections to quickly get a PPP loan.
“And while we are grateful to SBA for providing data that I have been calling for since the start of PPP, it is no secret that there have been errors that are cause for concern. I am troubled by the Bloomberg news report that at least 226,000 loans were likely misreported by Congressional district—making it even harder for us to understand how businesses in our district fared in the program.
“Meanwhile, a report from the New York City Comptroller suggests that PPP loans were made in greater frequency in states that were less hit by COVID-19 than in epicenters like New York City. And as we all know—the pandemic has been especially unforgiving for our communities of color. Minorities have borne the brunt of the health consequences of this terrible virus.
“We cannot let their businesses also disproportionately bear the economic consequences. According to a survey, a mere 12% of Black and Latino business owners who applied for PPP loans reported receiving what they asked for and nearly half anticipate being forced to close permanently in the near future. And we don’t even know how Asian and Native American business owners fared because demographic data wasn’t asked to be voluntarily provided.
“That is why collecting demographic data on these loans was imperative. I will continue to press to set-aside more resources for minority- and women-owned businesses. And I hope that you will commit to do more for these businesses in what are sure to be tough months ahead. I’m sure you both can understand—many in our country are frightened, they are angry, and they are hurting.
“We are here today to bring transparency and accountability to ensure that America knows they have a government that works as well for them as it does for the well-connected corporations and friends of this Administration. As lockdown orders started in March, storefronts were shuttered, and waves of lay-offs were taking place. In response, Congress provided relief to reeling businessowners and their employees.
“First, Congress established the Paycheck Protection Program, or PPP, to provide forgivable loans to businesses and nonprofits for mainly covering payroll. Second, to help small businesses that needed financing beyond PPP, Congress enhanced SBA’s EIDL program to get more flexible working capital to more businesses, faster.
“Knowing that small businesses operate on razor thin margins, Congress created the EIDL grant program to get cash into the hands of small businesses quickly to bridge the gap until their loans are disbursed.
“Despite the flaws in their implementation, these programs have been a lifeline for millions of entrepreneurs and job creators, injecting over $670 billion dollars into the economy. To address concerns and make the programs work better, our Committee held numerous hearings and forums with small businesses, lenders, and leading policy experts over the past few months.
“One of the top issues we heard from PPP stakeholders is the incomplete and ever-changing guidance.Borrowers testified they had very little guidance regarding how to spend their loans so they could qualify for full forgiveness. And lenders are still reporting the process for seeking forgiveness is unclear and unworkable.If forgiveness is the centerpiece of the program, a streamlined, efficient process for getting those loans forgiven should be a priority.
“Turning briefly to EIDL, the lack of clear communication has been an ongoing problem. Given the urgency of this pandemic and the uncertainty for so many small businesses, SBA must do a better job communicating.
“As the spread of COVID-19 has accelerated in recent weeks and lockdown orders return, it will be extremely important that we take lessons learned since March to stave off unnecessary bankruptcies and make sure these programs are working for America’s small firms. We also need to explore other ways SBA can support our small business sector, like turning to tried-and-true program enhancements that worked after the Great Recession.
“Once again, thank you for being here today.”