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PPP Flexibility Act Headed to President’s Desk Brings Necessary but Insufficient Changes to Troubled Business Loan Program

Thursday, June 4, 2020
Ashley Harrington

Transparency and structural changes still needed to ensure funds reach the smallest small businesses and business owners of color

WASHINGTON, D.C. – Last night, the U.S. Senate, by unanimous consent, approved the Paycheck Protection Program Flexibility Act of 2020 (H.R. 7010). Since the bill already passed the House of Representatives, it now goes to the president, who is expected to sign it into law. H.R. 7010 makes 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 have called for the following improvements to PPP, beyond those already reflected in H.R. 7010, including the following:

  • Streamlined forgiveness and safe harbor for borrowers that received small loans;
  • Requiring the collection and reporting of data on borrower demographics and loan amounts; 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.

Center for Responsible Lending (CRL) Federal Advocacy Director and a Senior Counsel Ashley Harrington released the following statement:

The improvements in H.R. 7010 do not go far enough to ensure a fair shot for small businesses that are at a disadvantage. The PPP is not providing sufficient help to many small businesses that have been hardest hit.

Congress must act with more urgency to provide transparency to an opaque process and to remove barriers that limit relief for small businesses that were underserved by the financial sector even before COVID-19. These businesses are a lifeline in their communities and Congress must immediately work on additional legislation to implement these necessary provisions so that the full benefits of the program, from initial funding to loan forgiveness, are accessible to all.

Additional Background

CRL issued this policy brief on how the Paycheck Protection Program continues to be disadvantageous to smaller businesses, especially businesses owned by people of color and the self-employed.

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Press Contact: matthew.kravitz@responsiblelending.org