Rep. Sherrill Joins Effort Urging Treasury Department & SBA to Fix Issues with Paycheck Protection Program, Encourage Additional Lenders to Issue Forgivable Loans to Small Businesses Amid COVID-19
Following the Launch of SBA’s Paycheck Protection Program Last Friday, Small Business Owners in New Jersey, Across the Country Have Faced Barriers from Lenders
Parsippany, NJ — Representative Mikie Sherrill (NJ-11) joined an effort today calling on the U.S. Department of the Treasury and the U.S. Small Business Administration (SBA) to take immediate steps to encourage additional lenders to issue Paycheck Protection Program (PPP) loans to small businesses struggling due to the COVID-19 pandemic.
The PPP—launched last Friday—is meant to distribute fully forgivable loans for businesses to cover payroll costs, mortgage interest, rent, and utilities. However, small business owners in New Jersey have reported many barriers since the opening of the PPP program—including lenders refusing to take new applications for PPP loans and lenders subjecting businesses to additional, burdensome requirements. Additionally, if a business’ primary lender does not accept their PPP application because they do not meet that lender’s preference, they are left with nowhere to turn—as most lenders require previously established relationships as part of the application criteria. Unfortunately, these barriers might appear insurmountable to many small businesses in New Jersey, particularly as the PPP has a limited amount of funding that is being distributed on a first come, first served basis.
In a letter sent to U.S. Treasury Secretary Steven Mnuchin and U.S. SBA Administrator Jovita Carranza, Representative Sherrill and her colleagues expressed their concerns about the PPP’s shaky rollout and its consequences for small businesses needing financial assistance during the coronavirus pandemic. Additionally, the lawmakers called on the SBA and the Treasury Department to provide additional guidance to PPP lenders that would clarify eligibility requirements and encourage lenders to provide PPP loans to all eligible businesses.
“We were shocked and disappointed to learn that, contrary to Congressional intent, individual qualified lenders have been demanding additional requirements of businesses that wish to apply for a loan, including an existing small business relationship between the lender and the business,” the Members of Congress wrote. “We ask that the SBA and the Department of Treasury provide additional guidance to PPP lenders that would clarify eligibility requirements and encourage lenders to provide PPP loans to all eligible businesses.
Last month, the President signed the PPP into law as part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act, which Sherrill voted to pass earlier that day.
The letter was led by Representatives Abigail Spanberger (VA-07) and Kendra Horn (OK-05) and was also signed by Representatives Stephanie Murphy (FL-07), Jim Cooper (TN-05), Daniel W. Lipinski (IL-03), and Joe Cunningham (SC-01).
Click here to read the letter, and the full letter text is also below.
Dear Administrator Carranza and Secretary Mnuchin,
We write to urge your immediate attention and swift action on an issue that threatens the financial security and longevity of small businesses.
On March 27, the House passed the CARES Act (PL 116-136), which was shortly thereafter signed into law, to respond to the economic effects of the coronavirus pandemic. As the public health measures necessary to slow the spread of coronavirus are taking a particular toll on small businesses, the CARES Act provides significant assistance to small businesses that otherwise might not survive the impact, including through the Paycheck Protection Program (PPP).
The PPP, found in Section 1102 of the CARES Act, is a $349 billion loan program—managed by private sector lenders but guaranteed by the government—to help small businesses keep afloat during a time of social distancing and mandatory business closures. As a resource for small businesses, sole proprietors, contractors, and the self-employed, PPP loans are meant to be available for small businesses, defined as having fewer than 500 employees, that have suffered economic hardship as a result of COVID-19.
Accordingly, we were shocked and disappointed to learn that, contrary to Congressional intent, individual qualified lenders have been demanding additional requirements of businesses that wish to apply for a loan, including an existing Small Business relationship between the lender and the business. We ask that the SBA and the Department of Treasury provide additional guidance to PPP lenders that would clarify eligibility requirements and encourage lenders to provide PPP loans to all eligible businesses.
Thank you for your attention to this critical matter and for your work to address the economic impacts of this pandemic. Your swift action on this issue will help alleviate the concerns of our nation’s small businesses, which are vital to our country and our communities.