Van Hollen, Rounds Make Bipartisan Push for SBA, Treasury to Provide Small Businesses, Non-Profits with Much-Needed Clarity on PPP

Today, U.S. Senators Chris Van Hollen (D-Md.) and Mike Rounds (R-S.D.) wrote a bipartisan letter to Treasury Secretary Steve Mnuchin and Administrator Jovita Carranza of the Small Business Administration (SBA) urging the two agencies to provide small businesses and non-profits with much-needed guidance on the Paycheck Protection Program (PPP). In their letter, the Senators specifically push SBA and Treasury to clarify whether those who have previously applied for the PPP – but returned some or all of their funds due to uncertainty in the program – are able to reapply following Congress’s recent modifications to the program. The Senators stress that as many small businesses and non-profits continue to struggle under the economic consequences of the COVID-19 pandemic, this guidance is crucial to ensuring those who need these funds are able to receive them.

The Senators begin, “We write to you today to urge you to immediately issue updated guidance clarifying that small businesses and non-profits who previously returned their Paycheck Protection Program (PPP) loans are allowed to reapply now that Congress made updates to the program through the Paycheck Protection Flexibility Act (P.L. 116-142).” 

They go on to note the need for this clarification writing, “PPP loans were awarded to many well-deserving borrowers who decided to return or reject the funds or accept a smaller loan amount for fear that they could not meet the program’s previous forgiveness requirements. Modifications to the program under the Paycheck Protection Program Flexibility Act provide an opportunity for these small business owners to reapply for loans with more favorable forgiveness terms than under the original program.” 

The Senators point out that without clarity, many facing economic hardship may not reapply to the program. They state, “The Paycheck Protection Program was meant to serve as a lifeline to small business owners so that they could cover employee salaries and certain fixed costs. However, if businesses and lenders are not provided clarity from your agencies regarding their ability to reapply or request a loan increase, the modified program will not reach many small businesses and non-profit organizations that are still in urgent need of assistance.”

They stress that many small businesses and non-profits are still in need of assistance, urging, “Congress authorized the PPP for good reason, and we expect those administering the program to encourage its use.”

The full text of the letter is available here and below. 

Dear Secretary Mnuchin and Administrator Carranza,

We write to you today to urge you to immediately issue updated guidance clarifying that small businesses and non-profits who previously returned their Paycheck Protection Program (PPP) loans are allowed to reapply now that Congress made updates to the program through the Paycheck Protection Flexibility Act (P.L. 116-142). 

PPP loans were awarded to many well-deserving borrowers who decided to return or reject the funds or accept a smaller loan amount for fear that they could not meet the program’s previous forgiveness requirements. Modifications to the program under the Paycheck Protection Program Flexibility Act provide an opportunity for these small business owners to reapply for loans with more favorable forgiveness terms than under the original program. According to reports, companies that returned PPP loans can reapply for a loan as long as they do not have an active E-Tran loan number. However, there is still confusion among small business owners and lenders regarding application guidelines and whether or not a business has the ability to reapply.

The Paycheck Protection Program was meant to serve as a lifeline to small business owners so that they could cover employee salaries and certain fixed costs. However, if businesses and lenders are not provided clarity from your agencies regarding their ability to reapply or request a loan increase, the modified program will not reach many small businesses and non-profit organizations that are still in urgent need of assistance.

This is especially troubling considering the large number of small businesses still facing hardship due to the pandemic, the resulting high unemployment rate, and the over $130 billion in unused PPP funds still awaiting disbursement. Congress authorized the PPP for good reason, and we expect those administering the program to encourage its use.  

As we continue to navigate this difficult time for our nation, we must stay united in our resolve to combat this virus and the economic crisis it has created. The federal government must equip small business owners and PPP lenders with the knowledge and reassurance needed to effectively utilize the modified program as intended by Congress.

Sincerely,