[WASHINGTON, DC] – U.S. Senators Tammy Duckworth (D-IL) and Ed Markey (D-MA), both members of the Senate Small Business and Entrepreneurship (SBE) Committee, today requested the U.S. Small Business Administration (SBA) and U.S. Department of the Treasury implement a streamlined Paycheck Protection Program loan forgiveness application and reduce paperwork for borrowers with loans of $100,000 or less. The letter also asks SBA and Treasury to provide these borrowers with reasonable safe harbors that lenders can rely upon when processing their loan forgiveness and commit to collecting borrower demographic data as was recommended by SBA’s Inspector General in a report last month. U.S. Senators Dick Durbin (D-IL), Sheldon Whitehouse (D-RI), Patrick Leahy (D-VT), Mazie Hirono (D-HI), Jacky Rosen (D-NV) and Kirsten Gillibrand (D-NY) also joined Duckworth and Markey in sending this letter.

“We are concerned that the recently released guidance on loan forgiveness is too burdensome for the smallest businesses, and will be incredibly time-consuming and costly for microbusinesses, small businesses owned by people of color and sole proprietorships who would have to hire accountants and other consultants just to apply for forgiveness.” The Senators wrote. “Further, we worry that this complexity is likely to discourage the smallest businesses still in need of funding from applying for much needed aid.”

“Unfortunately, SBA and Treasury’s formal guidance requires that small business owners go beyond much of the documentation that they would regularly track,” the Senators continued. “This process is especially burdensome for the smallest businesses, and threatens to undermine recent positive administrative actions to help ensure that funding finally reaches these underserved small businesses. These business owners do not have teams of lawyers and accountants often retained by larger businesses, and microbusinesses should not be held to the same forgiveness standards as those receiving larger loans that are able to comply with complex forgiveness guidelines.”

As of May 30, 2020, over 4.4 million small business owners have been approved for a PPP forgivable loan, with nearly eighty percent of these loans totaling $100,000 or less. These loans make up just twenty percent of the overall loan amount of the PPP. That means over 4.4 million business owners, including many microbusiness owners, will be seeking loan forgiveness through their lender, some this week. Most business owners applied for PPP loans with the understanding that if they retained employees while meeting the other guidelines of the program, their loans would be forgiven.

In May, Duckworth joined Senator Markey in introducing legislation to make sure funding appropriated for the Paycheck Protection Program is better targeted towards small business owners of color who have been shut out from the existing PPP due to a lack of pre-existing relationships with large banks and needs for smaller loan amounts.

Full text of the letter is included here and below.

June 4, 2020

The Honorable Jovita Carranza                                  The Honorable Steven Mnuchin
Administrator                                                              Secretary
U.S. Small Business Administration                          U.S. Department of the Treasury
409 3^rd St. SW                                                            1500 Pennsylvania Ave. NW
Washington, DC 20416                                              Washington, DC 20220

Dear Administrator Carranza and Secretary Mnuchin:

We are greatly appreciative of the continued willingness of the U.S. Small Business Administration (SBA) and U.S. Department of Treasury (Treasury) to engage with Congress on making much needed changes to the administration of the Paycheck Protection Program (PPP). However, we are concerned that the recently released guidance on loan forgiveness is too burdensome for the smallest businesses, and will be incredibly time-consuming and costly for microbusinesses, small businesses owned by people of color and sole proprietorships who would have to hire accountants and other consultants just to apply for forgiveness. Further, we worry that this complexity is likely to discourage the smallest businesses still in need of funding from applying for much needed aid.

As of May 30, 2020, over 4.4 million small business owners have been approved for a PPP forgivable loan, with nearly eighty percent of these loans totaling $100,000 or less. These loans make up just twenty percent of the overall loan amount of the PPP. That means over 4.4 million business owners, including many microbusiness owners, will be seeking loan forgiveness through their lender, some this week. Most business owners applied for PPP loans with the understanding that if they retained employees while meeting the other guidelines of the program, their loans would be forgiven.

Unfortunately, SBA and Treasury’s formal guidance requires that small business owners go beyond much of the documentation that they would regularly track. This process is especially burdensome for the smallest businesses, and threatens to undermine recent positive administrative actions to help ensure that funding finally reaches these underserved small businesses. These business owners do not have teams of lawyers and accountants often retained by larger businesses, and microbusinesses should not be held to the same forgiveness standards as those receiving larger loans that are able to comply with complex forgiveness guidelines.

Congress created PPP to make sure small business owners harmed by COVID-19 could access forgivable loans, to help them survive this global pandemic. To that end, we respectfully request that SBA and Treasury update the loan forgiveness guidance by close of business on Monday, June 8, 2020 to address the following concerns:

1. Streamline and simplify the PPP forgiveness application into an easy to use form for small businesses with loans of $100,000 or less, so the smallest businesses and their lenders can fully participate in the program. We encourage you to provide any flexibility possible for these borrowers in the documentation required to be submitted. Borrowers of these small loans should not be required to submit documentation other than the application form.
2. Create a reasonable safe harbor for borrowers that received loans of $100,000 or less. Lenders may rely on any such certifications made by the borrower in the streamlined forgiveness application.
3. In any forgiveness form and loan application, commit to collecting and reporting borrower demographic information as SBA currently does for regular 7(a) loans and that the SBA’s Office of Inspector General suggested as needed action in its PPP oversight implementation report released in May 2020.^[1] While we commend SBA for including demographic data collection on the current forgiveness application, it is necessary that the information be collected alongside other requested borrower information, not as an addendum at the end of the forgiveness application.

Thank you for your continued commitment to help America’s small businesses during these difficult times. We look forward to your prompt response.

Sincerely,                                              

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