U.S. Senate committee holds hearing on future of Paycheck Protection Program
WASHINGTON, D.C. – The U.S. Senate Committee on Small Business and Entrepreneurship held a hearing today entitled “Small Business in Crisis: The 2020 Paycheck Protection Program and its Future.”
During the hearing, Committee Chairman Sen. Marco Rubio (R-FL) and other senators discussed the successes and failures of the original Paycheck Protection Program (PPP) and potential changes and adjustments necessary should a new round of PPP loans be authorized in an impending COVID-19 economic stimulus bill.
Every senator that participated in this hearing noted the overwhelming success of the Paycheck Protection Program (PPP) in assisting small businesses through the pandemic and acknowledged the urgent need for a renewed round of PPP lending.
However, most agreed that there are substantive changes that need to be made in order to ensure the program is a success in targeting the small businesses that are suffering the most.
In his opening statement, Committee Chair Sen. Marco Rubio (R-FL) said:
“It is very timely not just to look back at the previous round of assistance, but as we are contemplating new assistance, how we can learn from the problems in the first round and make it better.”
During the hearing, senators questioned four witnesses: Douglas Holtz-Eakin, the President of the American Action Forum and former director of the Congressional Budget Office, Dafina Williams, Vice President of Public Policy at the Opportunity Finance Network, Thomas Zernick, President of SBA Lending at First Home Bank in Florida, and Iman McFarland, a Maryland small business owner.
All four witnesses repeatedly stressed the necessity of the Paycheck Protection Program being included in the impending COVID-19 economic stimulus legislation.
In addition to the request for another round of PPP, panelists at the hearing discussed the necessity of changes to the lending process.
One of the major issues addressed was the unexpected SBA regulation that deducted EIDL funds from the amount forgiven on a PPP loan. This stipulation caused businesses who acquired both a PPP loan and an EIDL Advance to be left with an unexpected payment on a loan they expected to be forgiven.
These unexpected costs create difficulties for the borrower, who is required to pay a loan they do not have the funds for, and the lender, who is tasked with holding and servicing loans they did not anticipate.
Panelists expressed concern that, if this provision were not removed for the next round of PPP lending, borrowers and lenders would be unwilling to participate in the program.
The overall message of the hearing was clear—small businesses in the United States are still struggling, and are in desperate need of an immediate re-authorization of the Paycheck Protection Program. Lawmakers are still negotiating the terms of a potential economic stimulus bill, including a renewed Paycheck Protection Program.
ASA has been working hard to urge members of Congress to pass stimulus legislation before adjourning for the holidays. To send a letter to your representative in support of the Paycheck Protection Program, click here.
To watch the hearing video, click here.