Washington, D.C. — The Center for Responsible Lending (CRL), American Business Immigrant Coalition (ABIC), and more than 20 consumer, civil rights and advocacy groups and lenders, recently submitted a letter urging the U.S. Treasury Department and U.S. Small Business Administration (SBA) to reverse the Good Faith Error Rule that has prevented more than 300,000 small business owners from obtaining forgiveness of Paycheck Protection Program (PPP) loans.
Co-signers of the letter also include the Small Business Majority, Main Street Alliance, Opportunity Finance Network, National CAPACD, NALCAB, the US Hispanic Chamber of Commerce and others.
The rule denies full loan forgiveness to businesses – primarily sole proprietorships or firms with ten or fewer employees – who made good faith errors on their PPP loan application, due to the chaotic rollout of the program and numerous rule changes imposed without advance notice. Most of these businesses didn’t have accountants or attorneys to decipher the complex and ever-changing eligibility rules. They applied for the loan funds in good faith, based on their understanding of the rules.
“The Good Faith Error Rule particularly penalizes small business owners and businesses owned by people of color, exacerbating inequities and causing further harm to those least able to withstand the financial blow,” said Sunny Glottmann, a researcher at CRL. “Small businesses are the backbone of America’s economy, and forgiveness rules should help, not hurt, the owners who most needed assistance during the prolonged COVID-19 public health emergency.”
CRL, ABIC and letter co-signers joined Rep. Chrissy Houlahan (D-PA) and other members of Congress, including House Small Business Committee Chairwoman Nydia Velásquez, in urging the agencies to correct the harm caused by blindly applying the Good Faith Error rule.
“This ruling fails to appreciate PPP deadlines and limited funding that made it imperative for small businesses and self-employed individuals to apply for their fair share of relief as quickly as possible, while struggling to survive a global pandemic that shuttered much of the country for weeks at a time,” the CRL and ABIC-led letter states.
- Small Business Matters: Forgive PPP Loans and Strengthen Section 1071
- Letter from Chairwoman Velazquez, Rep. Houlahan and Rep. Chu
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