April 09, 2020

Duckworth to Trump Administration: Fix Implementation Issues with SBA Loans Immediately

 

[WASHINGTON, DC] – U.S. Senator Tammy Duckworth (D-IL) led seven of her Senate colleagues in writing to the U.S. Small Business Administration (SBA) Administrator Jovita Carranza and U.S. Department of the Treasury Secretary Steven Mnuchin about reports that lack of guidance and extreme limitations have kept SBA loans from being properly administered to small business owners across the country. In the letter, the Senators demand Carranza and Mnuchin resolve these implementation issues by providing new guidance that offers access to eligibility experts at SBA and Treasury and finalizes all guidance to lenders from processing to closing. 

In part, Duckworth wrote, “Like you, we had hoped that this program would be an immediate success for small businesses and their employees to help alleviate the financial burdens of COVID-19. Unfortunately, we have learned that some financial institutions have yet to start offering the loans due to a lack of guidance from the Small Business Administration (SBA) and the U.S. Department of the Treasury (Treasury), are limiting the timeframe for small businesses to apply for loans, or are only offering loans to current customers who have or had an existing small business loan, checking account or credit card with their financial institution. These combined issues create a system of winners and losers for borrowers and lenders alike.”

Along with Duckworth, this letter was signed by U.S. Senator Catherine Cortez Masto (D-NV), Ed Markey (D-MA), Dick Durbin (D-IL), Dianne Feinstein (D-CA), Elizabeth Warren (D-MA), Jacky Rosen (D-NM) and Mazie Hirono (D-HI). 

This week, Duckworth joined U.S. Senator Ben Cardin (D-MD) in sending a letter to Carranza and Mnuchin urging them to take steps to ensure that the most vulnerable small businesses have access to the important financial resources authorized by the CARES Act. Duckworth also supported the Small Business Debt Relief Act, which was included in the CARES Act and would ensure that the 320,000 small businesses across the country with a loan backed by the SBA are relieved from loan payments for the next six months.

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

April 8, 2020

VIA ELECTRONIC DELIVERY

The Honorable Jovita Carranza
Administrator
U.S. Small Business Administration
409 3rd St, SW
Washington, DC 20416

The Honorable Steven Mnuchin
Secretary
U.S. Department of the Treasury
1500 Pennsylvania Ave. NW
Washington, DC 20220

Dear Administrator Carranza and Secretary Mnuchin:

We are deeply concerned by reports of financial institutions turning away or being unable to lend to small businesses, private non-profits and other entities seeking capital through the Paycheck Protection Program created by the Coronavirus Aid, Relief and Economic Security Act (CARES Act).

Like you, we had hoped that this program would be an immediate success for small businesses and their employees to help alleviate the financial burdens of COVID-19. Unfortunately, we have learned that some financial institutions have yet to start offering the loans due to a lack of guidance from the Small Business Administration (SBA) and the U.S. Department of the Treasury (Treasury), are limiting the timeframe for small businesses to apply for loans, or are only offering loans to current customers who have or had an existing small business loan, checking account or credit card with their financial institution. These combined issues create a system of winners and losers for borrowers and lenders alike.

This is not the first time a lack of guidance has caused problems for borrowers and lenders in a time of crisis. In 2010, the Government Accountability Office (GAO) issued a report detailing SBA’s inability to promulgate the emergency regulations implementing the America’s Recovery Capital (ARC) Loan Program, as authorized by the American Recovery and Reinvestment Act of 2009.[1] This created significant confusion among lenders and borrowers seeking financing from the ARC Loan program. Although SBA issued revised guidance that addressed the GAO’s recommendations, it is clear that SBA, working hand-in-hand with Treasury, must revisit GAO concerns and recommendations made in previous reports on economic stimulus loans as they implement the Paycheck Protection Program, and other programs authorized by the CARES Act.

Congress passed the CARES Act in part to make sure small businesses in every community harmed by COVID-19 can access financial assistance during these unprecedented times. To that end, we request that SBA and Treasury quickly issue guidance that:

  1. Offers access to eligibility experts at SBA and Treasury who can help borrowers and lenders determine if a borrower is eligible to apply for a Paycheck Protection Loan and how to calculate and document the loan amounts and expected forgiveness, and;
  1. Finalizes all regulations to lenders, from processing to closing, so they can get funds to borrowers immediately. We have seen reports that banks are being directed by Treasury and SBA to not close loans until they have received guidance.

Thank you in advance for your prompt response to our urgent request.


Sincerely,