Washington, D.C. – The Center for Responsible Lending (CRL) and a coalition of 51 small business advocates submitted a letter to Congress today calling for fair treatment for microbusinesses seeking forgiveness of Paycheck Protection Program (PPP) loans. The letter states that more than 400,000 microbusinesses that received PPP loans of $25,000 or less in 2020 are being required to repay all or a portion of this emergency relief.

The letter applauds Congress and the Small Business Administration’s (SBA) swift action in implementing PPP loans to address urgent needs as the pandemic and ensuing public health crisis wreaked havoc on small businesses nationwide, but notes that the rollout was chaotic. Initial funding was limited and quickly depleted, rules and regulations were updated without grace periods, and some rules were not clearly defined in application paperwork given to borrowers.

“Navigating complex and ever-changing eligibility rules was challenging for all small businesses, but for microbusinesses, which are unlikely to have accountants or attorneys on staff and often lack the resources to access these professionals, it was overwhelming. For ‘non-employer firms’ (self-employed individuals, independent contractors, and sole proprietors with no employees other than the business owner), it was practically impossible,” the letter states. “As a result, despite applying in good faith under the rules as they understood them, being approved by SBA-approved lenders and by the SBA, and using the funds as Congress intended, many of these microbusinesses are being denied full forgiveness."

“Now, the inability to obtain promised loan forgiveness is threatening to shutter the very businesses this program was created to protect,” said Sunny Glottmann, a researcher at CRL. “This is especially harmful to people of color, given that over 90 percent of all Black, Latino and immigrant-owned businesses are microbusinesses. Good faith errors by business owners should not exacerbate pre-existing inequities to the owners of microbusinesses least able to withstand the impact of unexpected debt.”

Urgent recommendations in the letter include:

  • Eliminate denials of loan forgiveness due to sudden changes in rules that were imposed without advance notice, both for business owners who have not yet applied for forgiveness and those who have been denied full forgiveness due to changes without advance notice.
  • Rescind and reverse the SBA’s Jan. 15, 2021 rule denying forgiveness to borrowers who made good faith errors, both for business owners who have not yet applied for forgiveness and those who have been denied full forgiveness under SBA’s unfair January 15, 2021 standard.
  • Alleviate unnecessary paperwork burdens for microbusinesses by implementing automatic forgiveness for loans of $25,000 or less.


Press Contact: Vincenza Previte vincenza.previte@responsiblelending.org

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