House Committee on Small Business Holds Online Forum
The U.S. House Committee on Small Business held an online forum with Small Business Administration (SBA) lenders to discuss the Paycheck Protection Program (PPP) and future efforts. Throughout the online forum, similar sentiments were expressed from members of Congress and panelists praising the work done thus far from the U.S. Small Business Administration and U.S. Department of Treasury rapidly providing loans and guidance to small businesses nationwide considering the PPP is a new program.
However, panelists did discuss the issues and failures of the program thus far. Repeatedly mentioned was the lack of clarity and guidance for both borrowers and lenders regarding the forgiveness process. So far, the Department of Treasury and the SBA have issued guidance on a rolling basis, including 46 FAQ sheets and 9 interim rules, none of which include guidance on the forgiveness process. It was noted that borrowers are anxious with the lack of clarity on forgiveness and are hesitant to use loans they have received from the PPP. The Department of Treasury recently issued “Notice 2020-32, [which] provides that otherwise deductible business expenses are not deductible if the taxpayer is the recipient of a Paycheck Protection Program (PPP) loan that is subsequently forgiven,” effectively making PPP loans taxable. Members of Congress sent a letter to Treasury Secretary Steven Mnuchin stating that this notice goes against the intent of Congress when establishing the PPP.
Additionally, panelists agreed on the need for increased flexibility with PPP loans. Issued guidance states that 75% of the PPP loan must be used on payroll costs, while the other 25% can be used for rent, utilities, etc. Panelists noted that not all small businesses needed to spend 75% of the loan on payroll costs but did need to utilize larger parts of the loan for other costs.
Earlier this week, the U.S. House of Representatives Democratic leadership unveiled the COVID-19 fourth stimulus package. Included in the package are changes to the PPP as the pandemic continues to effectively impact small businesses nationwide.
- Tony Wilkinson, President & CEO National Association of Government Guaranteed Lenders, Dallas, TX
- Dafina Williams, Vice President of Public Policy Opportunity Finance Network, Washington, D.C.
- Brett Palmer, President Small Business Investor Alliance, Washington, D.C.
- D. Jay Hannah Executive Vice President of Financial Services BancFirst, Oklahoma, City, OK
To view the discussion, click here.