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House’s PPP Flexibility Act Addresses Some Business Loan Program Issues, More Structural Fixes Needed

Friday, May 29, 2020

Coalition of civil rights and consumer organizations urge Senate to include provisions to strengthen PPP’s infrastructure

WASHINGTON, D.C. - The U.S. House of Representatives recently passed H.R. 7010, the Paycheck Protection Program Flexibility Act. The bill makes two important improvements to the Paycheck Protection Program (PPP), including extending the covered expense period from 8 to 24 weeks and pushing back the PPP processing deadline from June 30 to December 31, 2020.

The legislation did not include several key fixes that are critically important for ensuring that the smallest and most vulnerable businesses including those owned by people of color have sufficient access to PPP funding and forgiveness. A wide range of civil rights and community development advocates called for the following improvements to PPP, beyond those already reflected in the House version, including the following:

  • Streamlined forgiveness and safe harbor for borrowers that received small loans; and
  • Setting a minimum origination fee for the smallest loans to ensure that there is not a disincentive to serve the smallest businesses and sole proprietors

The Senate has the opportunity to address these additional provisions in a companion bill that will soon be considered.

The Center for Responsible Lending, NALCAB, Hope Policy Institute, UnidosUS, National Fair Housing Alliance, National CAPACD, and the NAACP released the following joint statement:

This bill provides needed improvements to help some small business owners, but doesn’t go far enough to address critical infrastructure issues within PPP that make it hard for small businesses owned by people of color to get their fair share of relief. This legislation also does not take basic steps to ensure equity and transparency as it does not require data on borrower demographics and loan amounts to be collected or reported.

Several statutory and regulatory impediments remain that prevent underserved small business owners and sole proprietors--including those owned and controlled by socially and economically disadvantaged individuals, women, the underbanked, and those with limited English proficiency--from full participation.

The unworkable process for small businesses to apply for loan forgiveness penalizes current PPP borrowers and discourages small businesses that need the aid from applying. Businesses of color, that tend to be smaller, are particularly harmed by these continuing faults in the program. Providing adequate SBA paid lender fees for small loans is also critical to enable lenders to provide these loans.

Congress and the Treasury must ensure that the program provides desperately needed emergency financial assistance to underserved small business owners and sole proprietors. Since the PPP started, it's been deeply troubling that the program was implemented in a manner that prioritized the largest and most resourced businesses. We urge the Senate to build on the House bill so smaller businesses get the resources they need to endure this crisis and help our most vulnerable communities recover.

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Press Contact: ricardo.quinto@responsiblelending.org