Removing Barriers Blog

Letters sent for two House Small Business Subcommittee hearings
Posted September 25, 2020 by CUNA Advocacy

In addition to the hearings in Senate Banking and House Financial Services, two House Small Business Subcommittees met this week to discuss the Paycheck Protection Program.  We took the opportunity to outline additional steps that should be taken if Paycheck Protection Program (PPP) funding becomes available and wrote in support of H.R. 7777, Paycheck Protection Program Small Business Forgiveness Act and its Senate companion S. 4117.  

Below you will find the letter to each respective Committee: 

This legislation would provide forgiveness for PPP loans of $150,000 or less if the borrower submits an attestation form to the lender. It also ensures that the lender will be held harmless from any enforcement action if the borrower’s attestation contained falsehoods. This threshold captures the vast majority of loans and is the amount at which the CARES Act makes the lowest cutoff in determining lender processing fees. The agencies should consider making forgiveness of these loans automatic or require a simple good faith certification that the funds were spent on forgivable expenses. 

The key benefit of PPP over other loan programs is loan forgiveness. This unique feature effectively turns a PPP loan into a grant if specific conditions are met for the use of the borrowed funds. Loan forgiveness helps support businesses by providing funding to pay employees and other operating expenses that will not have to be repaid, allowing businesses to stay solvent in a time of decreased revenues while providing for a mechanism for employees to be paid even if a business was closed and unable to operate.

Now that the PPP program has transitioned to the loan forgiveness phase, credit unions are concerned that the loan forgiveness process is overly complicated for most businesses. The process is so complex that most businesses may need to retain outside counsel to navigate the application process – an expense many of the smallest businesses cannot afford during normal times, much less in this crisis. Creating an overly complex forgiveness process would seem to be the antithesis to the spirit of a program designed to rapidly deploy resources to small business, especially when the expectation is that the funds appropriated to PPP were never expected to be repaid.