The US House of Representatives Committee on Small Business Subcommittees recently held two back-to-back hearings titled “Paycheck Protection Program: A Review of Loan Forgiveness, SBA Legacy Systems, and inaccurate data ”and“ A P3 Forgiveness Review ”.
In mid-August, the Small Business Association (SBA) opened the loan cancellation portal for lenders and borrowers who participated in the Paycheck Protection Program (PPP). According to the Government Accountability Office (GAO), the SBA only processed 56,000 forgiveness requests, or less than 1% of the 5.2 million loans distributed through the PPP.
The U.S. House of Representatives Small Business Committee recently held two hearings to discuss the current state and future recommendations of the PPP. Subcommittee member Jason Crow (D-CO) opened Thursday’s hearing with this statement:
“Small business owners are resilient and they are used to overcoming challenges, but the coronavirus has been a blow. While the P3 has helped them retain key employees and make rents and other payments, many fear their loans will not be fully canceled and they will go into further debt. Forgiveness forms do nothing to alleviate these concerns. They are complex, confusing and take time.
At Thursday’s hearing, SBA Chief of Staff William Manger refuted accusations that the SBA’s e-Tran system was unable to handle the influx of PPP loan applications, indicated that the SBA was ready and willing to work with Congress if the P3 was extended, and expressed confidence in the SBA’s loan forgiveness application process. However, although Manger indicated that the SBA felt the loan application process was accessible to applicants seeking forgiveness, small business owners at Friday’s hearing proved that was not the case.
Witness Amy Bonfig, owner of a small business in Minnesota, said that she, along with other small business owners in her field, “don’t understand the complicated rules, the cryptic stipulations of the application and the most of the [of us] I don’t have the luxury of time to sort this out. Likewise, Lynn Ozer, president of SBA Lending at Fulton Bank in Pennsylvania, said lenders and banks are equally confused about their role in the loan cancellation process and are very concerned that the money they distributed to businesses in their communities is not reimbursed. as promised.
In addition to confusion over the loan forgiveness process, many borrowers have also expressed reluctance to file forgiveness requests, hoping Congress will soon pass legislation establishing an automatic loan forgiveness process for smaller, inferior loans. to $ 150,000. However, legislation introduced by ranking committee member Steve Chabot (R-OH) to expand the PPP and establish an automatic pardon process (HR 8365) was rejected by the House this week.
It is currently doubtful whether legislation to expand or modify the PPP will be passed before the November elections. This issue is divided along party lines, with US House Democrats arguing for a more comprehensive COVID-19 relief bill and Republicans pushing for an immediate extension. In the meantime, the SBA is committed to continuing to deploy assistance and resources to borrowers attempting to apply for loan forgiveness.