As June 30 application deadline approaches, House leaders ask for details on P3 small business loan program – The Charleston Chronicle
By Charlène Crowell
(TriceEdneyWire.com) – As the days remaining for small businesses dwindle to apply for loans through the Federal Paycheck Protection Program (P3), banks and federal officials are being challenged by several executives from the House to explain how the $ 670 billion program was intended to help small businesses across the country operated.
While over $ 130 billion remains, the program application deadline is June 30.
In two separate but related Hill hearings convened on June 17, the country’s tax status and how P3 taxpayer dollars are being used have been the focus of congressional investigation.
Jerome Powell, Chairman of the Federal Reserve testified before the House Financial Services Committee hearing titled, “Monetary policy and the state of the economy, reviewing the biannual central bank monetary policy report released on June 12.
In its preparation RemarksPresident Powell said, “To support the small business sector, we have created the Paycheck Protection Program Liquidity Facility to strengthen the effectiveness of the Paycheck Protection Act Payroll Protection Program. coronavirus aid, relief and economic security (CARES Act)… This direct support can make a crucial difference not only in helping families and businesses in times of need, but also in limiting the lasting damage to our economy. “
“If a small or medium-sized business becomes insolvent,” Powell continued, “because the economy recovers too slowly, we lose more than that one business. These businesses are at the heart of our economy and often embody the work of generations.
Speaking of the specific needs of blacks and other minority business owners, Powell added that “low-income households have experienced, by far, the biggest decline in employment, while job losses have occurred. Jobs among African Americans, Hispanics and women were more important than that. other groups. If not contained and reversed, the slowdown could further widen the gaps in economic well-being that the long expansion had closed. “
The second Hill hearing on June 17, convened by the House Committee on Small Business, was titled “Paycheque Protection Program: Loan Cancellations and Other Challenges.” This forum focused on what generally worked with the program, what did not work, recent changes Congress made to the program, and suggestions for continuing to optimize the program.
Ashley Harrington, Director of Federal Advocacy at the Center for Responsible Lending and Senior Policy Advisor testified in the session.
“Preserving businesses owned by people of color is paramount to a fair recovery,” Harrington said. “Businesses of employers owned by people of color are a substantial source of income and employment, accounting for over 8.9 million jobs for a total annual payroll of $ 295 billion and $ 1.4 trillion. of income… Business ownership is also a proven mechanism for wealth creation, with economic benefits that extend beyond the sole proprietorship to the wider community. Ensuring that federal small business assistance works for small businesses owned by people of color is essential to an inclusive economic recovery. “
On the same day, the Small Business Administration released a new, shorter PPP loan form for some borrowers. Only three pages long, this form must certify that employee hours have not been reduced and that the applicant company has not been able to operate at pre-coronavirus levels due to health mandates.
The new form may have been in response to growing concerns expressed about the program and the wave of requests for information on approved applicants and respective loan amounts.
The select committee on the coronavirus crisis, chaired by South Carolina representative Jim Clyburn demanded that US Treasury Secretary Steve Mnuchin, Jovita Carranza of the Small Business Administration and many of the country’s largest banks “take immediate steps to ensure that remaining P3 funds are allocated to businesses that really need them, and to increase transparency so taxpayers can see if federal funds are being misappropriated due to waste, fraud and abuse. “
This June 15e letter said in part: “Of the $ 310 billion in additional PPP funds allocated by this law, $ 60 billion has been earmarked for various community lenders, which have a proven track record of serving small businesses with no corporate relationships. long standing with major financial institutions. As of June 6, 2020, the SBA had approved more than $ 511 billion in PPP loans, leaving more than $ 130 billion available for future loans. “
Continuing, the select subcommittee added that the agencies “are providing more transparency on the administration of this program so that U.S. taxpayers can understand whether federal funds are helping vulnerable businesses and saving jobs, or being diverted due to the waste, fraud and abuse… Unlike the secretary. According to Mnuchin’s recent testimony, there is nothing “proprietary” or “confidential” about a business receiving millions of dollars appropriated by Congress and taxpayers deserve to know how their money is spent.
A similar letter from the select subcommittee was sent the same day to CEOs of the following banks: Citibank, Bank of America, JPMorgan Chase, PNC Bank, Santander, US Bank and Wells Fargo.
The letter from the chosen subcommittee in mid-June is the second time members have expressed concerns about the PPP. On May 8, the subcommittee asked companies that received $ 10 million or more in PPP loans to repay the funds or provide documents and information explaining why they thought they were eligible to keep the funds. These companies have also been identified as having 600 employees, publicly traded stocks and a minimum market capitalization of $ 25 million.
On June 13, three more Chairs of House committees also expressed their problems with a lack of disclosure with the PPP program.
Representatives Richard E. Neal (Ways and Means Committee), Maxine Waters (House Financial Services) and Nydia M. Velazquez (Small Business Committee) wrote jointly to Mnuchin and Carranza, stating in part: “Transparency is essential for ensure the The program works as intended… Additionally, we are deeply concerned that the Treasury and the SBA have not yet shared this information with the Government Accountability Office, which is required to report to Congress on the CARES Act. by the end of the month.
No one can predict what will or will not result from the pressure to ensure that a key federal program will in fact meet its legislative intent. Perhaps Dr Raphaël Bostic, Chairman and CEO of the Federal Reserve of Atlanta best summed up black America’s quest for financial justice:
“A commitment to an inclusive society also means a commitment to an inclusive economy. Such an economy would represent a rebuke of systemic racism and other structures of exclusion. This would represent a true adherence to the principles that all are created equal and should enjoy a life without burden, freedom and the pursuit of happiness… I think the Federal Reserve of Atlanta, and the Federal Reserve in general, can play an important role in helping to reduce racial inequalities and create a more inclusive economy. ”
Charlene Crowell is Senior Fellow at the Center for Responsible Lending. She can be reached at [email protected].