The House Small Business Committee will hold a hearing tomorrow at 1 p.m. ET titled "Paycheck Protection Program: Loan Forgiveness and Other Challenges." To view the witness list and additional hearing information, please click here.
Small businesses that received government-backed loans to ease the pain of the coronavirus pandemic are beginning to turn to a process some say is as complex as getting the money: figuring out whether they have to pay it back, the Wall Street Journal reported. Some small-business owners have spent dozens of hours wading through the 11-page forgiveness application for Paycheck Protection Program loans. Others are trying to determine how or whether legislation President Trump signed earlier this month changes the math. Some lenders say that the government is putting them in a difficult spot by making them responsible for determining forgiveness, and they fear being saddled with unprofitable loans. The Treasury Department and the Small Business Administration have issued 18 “interim final rules” and 48 pieces of guidance in the form of “frequently asked questions” for the program. The government has approved $512 billion in loans to nearly 4.6 million businesses since the program’s April rollout.The new law lengthens from eight weeks to 24 the time that borrowers have to use PPP funds and qualify for forgiveness. It also lets them spend 40 percent of the loan on rent and certain other expenses, up from 25 percent. The changes came in response to requests for more flexibility from small businesses that remain closed, were slow to reopen or spend more on rent and other overhead. Read more.(Subscription required.)
In related news, Senate Democrats are calling for the Small Business Administration and Treasury Department to simplify the application process for small businesses seeking loan forgiveness under a federal coronavirus aid program, the Wall Street Journal reported. In a letter dated on Friday to SBA Administrator Jovita Carranza and Treasury Secretary Steven Mnuchin, 47 Democratic and independent senators urge the agencies to take several steps to streamline the forgiveness application for the Paycheck Protection Program. “Since the release of the forgiveness form and instructions a few weeks ago, we have heard significant concerns from small businesses and lenders alike about the complexity of the process, especially for the smallest businesses,” the letter said. The Senators’ recommendations include a simpler application for low-dollar loans that would require minimal documentation and resources, including “how to” videos and a help line, for borrowers who need assistance completing the forgiveness form. Read more. (Subscription required.)
Additionally, federal authorities administering business payroll loans as part of U.S. coronavirus relief efforts on Friday eased rules prohibiting lending to business owners with criminal records, allowing some with no convictions in the past year to access funds, Reuters reported. The U.S. Treasury Department and the Small Business Administration said the look-back period for non-financial felony convictions has been reduced to one year from five years. The prohibition threshold for business owners with felonies involving fraud, bribery, embezzlement and similar offenses remains five years, they said. The change goes further than what U.S. Treasury Secretary Steven Mnuchin had suggested on Wednesday. He said the period for considering felony records would be reduced to three years. The Paycheck Protection Program, part of a historic fiscal package worth nearly $3 trillion passed by Congress and signed by President Donald Trump to deal with the economic fallout from the coronavirus pandemic, offers businesses loans that can be partially forgiven if used for employee wages. The Treasury Department and the SBA said the decision was made in the interest of criminal justice reform. Read more.
Treasury Secretary Steven Mnuchin yesterday offered a preview of the Trump administration's priorities for the next coronavirus emergency relief bill, including willingness to consider a new round of emergency loans for small businesses, The Hill reported. Speaking at a Senate Small Business Committee hearing, Mnuchin discussed the prospects for more Paycheck Protection Program (PPP) loans for small businesses and revamping recent changes to unemployment insurance. The secretary's appearance comes as congressional Republicans pump the brakes on another Covid-19 relief package. GOP lawmakers have raised concerns about rising deficits and argued that Congress should wait and see the effects of almost $3 trillion in previous aid.
In April, when the federal government offered $349 billion in loans to small businesses reeling from government shutdown orders in the pandemic, the funding ran out in just 13 days, prompting Congress to swiftly approve a second round of $310 billion. Small businesses have since grown more wary of taking the money, the New York Times reported. As of Tuesday, more than $130 billion was left in the fund, known as the Paycheck Protection Program. Even more striking was the fact that on many days last month, more money was being returned than borrowed, according to data from the Small Business Administration, which is overseeing the program — highlighting its uneven execution and confusing rules that deterred some small businesses from using the money. Thousands of companies that got loans have sent the money back, according to lenders. For some owners, the program’s terms were too restrictive; for others, the criteria for loan forgiveness was too murky. Some public companies that received these loans returned them after a public outcry, and in the initial rush, some borrowers accidentally got duplicate loans that they, too, returned. A total of around $12 billion was returned, Treasury Secretary Steven Mnuchin said at a Senate hearing on Wednesday. The amount of loans outstanding under the program dropped to $510.2 billion at the end of May, from $513.3 billion in the middle of the month, according to data from the Small Business Administration.
Two committees will be holding hearings today in the Senate and House of Representatives looking at key issues amid the economic fallout due to the Covid-19 pandemic. Jovita Carranza, Administrator of the U.S. Small Business Administration, and Treasury Secretary Steven Mnuchin will testify before the Senate Small Business Committee for a hearing at 10 a.m. ET titled "Implementation of Title I of the CARES Act." Click here for more information.
Also today, the House Financial Services Subcommittee on Housing, Community Development and Insurance will hold a hearing at noon ET titled "The Rent Is Still Due: America's Renters, Covid-19 and an Unprecedented Eviction Crisis." To view the legislation being considered, the hearing witness list and a link to the live webcast, please click here.
Two committees will be holding hearings on Wednesday in the Senate and House of Representatives looking at key issues amid the economic fallout due to the Covid-19 pandemic. Jovita Carranza, Administrator of the U.S. Small Business Administration, and Treasury Secretary Steven Mnuchin will testify before the Senate Small Business Committee for a hearing on Wednesday at 10 a.m. ET titled "Implementation of Title I of the CARES Act." Click here for more information.
Also on Wednesday, the House Financial Services Subcommittee on Housing, Community Development and Insurance will hold a hearing at noon ET titled "The Rent Is Still Due: America's Renters, Covid-19 and an Unprecedented Eviction Crisis." To view the legislation being considered, the hearing witness list and a link to the live webcast, please click here.
President Donald Trump on Friday signed into law legislation designed to make it easier for millions of small businesses to avoid being stuck with debt after taking government-backed loans during the pandemic, Politico reported. The bill would give businesses more leeway on how they spend funds through the so-called Paycheck Protection Program, which Congress created in March to fight mass layoffs during the Covid-19 outbreak. The program offers low-interest loans that can be forgiven if businesses agree to maintain their payrolls — an incentive that led to the issuance of 4.5 million loans totaling more than $510 billion. Restaurants and other businesses hit hard by nationwide social distancing measures warned that the rules for using the funds were proving to be too burdensome as much of the economy remains locked down for longer than lawmakers anticipated. The new law, which the House and Senate passed with overwhelming support, would give businesses more time to spend the money — 24 weeks instead of eight — and the ability to use more of it on non-payroll expenses while still qualifying for loan forgiveness.
