Congressional Panels Urge the Administration to Simplify PPP Loans
This week, Federal Reserve (Fed) Chairman Jerome Powell and U.S. Treasury Secretary Steven Mnuchin testified before the Senate Banking Committee and House Financial Services Committee to discuss the federal government’s response to the coronavirus crisis.
Both hearings centered around the state of economic recovery, the spike in COVID-19 cases, and a controversial decision by Secretary Mnuchin to end several Federal Reserve lending programs. However, with COVID-19 cases rising and fading economic momentum, both Fed Chair Powell and Secretary Mnuchin agreed that more fiscal stimulus to support the economy over the next few months of the pandemic would be beneficial, particularly for businesses.
Proposals to forgive businesses that received Paycheck Protection Program (PPP) funding remains a focus on Capitol Hill. AFSA continues to urge Congress to pass legislation that would forgive PPP loans of less than $150,000 and address potential issues with the “Loan Necessity Questionnaire” for businesses that received more than $2,000,000 from the PPP.
Senators Tim Scott (R-SC), Kevin Cramer (R-ND), and Catherine Cortez-Masto (D-NV) pressed Fed Chair Powell and Secretary Mnuchin to streamline and simplify the PPP forgiveness process for businesses (and lenders) that received funding to retain or retire employees. The Treasury Secretary agreed to use more regulatory flexibility with PPP forgiveness, but did not provide any details.
During the House Financial Services Committee hearing on Wednesday, Rep. Andy Barr (R-KY) also raised PPP forgiveness issues. Rep. Barr mentioned that many businesses have found the PPP forgiveness process to be slow and cumbersome and noted that many lenders would not participate in a potential second-round of PPP funding because of inadequate streamlining of the forgiveness rules. The Secretary reiterated his desire to forgive PPP loans and supported Congressional efforts to advance legislation that would forgive all PPP loans of $150,000 or less.
Separately, a bipartisan group of Senators and Members of the Problem Solvers Caucus in the House released a new COVID-19 relief package as negotiations between the White House and Democrats have stalled over the last few months. The proposal totals $908 billion of support, including $288 billion of forgivable loans for small businesses and a short-term moratorium on some pandemic-related lawsuits, among other items. However, the proposal doesn’t include direct payments to individuals. It’s unclear if the President and Congressional leaders can agree to any economic and health relief package before President-elect Joe Biden takes office in January.
AFSA will continue to urge Congressional leaders to pass legislation that would streamline the Paycheck Protection Program loan forgiveness process.
December 3rd, 2020 by Dan Bucherer