SBA’s Paycheck Protection Program is currently suspended due to lack of funds after two weeks of very high demand
Baldwin pushes for more funding and reforms to expand access
WASHINGTON, D.C. – U.S. Senator Tammy Baldwin is calling for robust funding and reforms to the Small Business Administration’s (SBA) Paycheck Protection Program (PPP) and the Economic Injury Disaster Loan (EIDL) program in upcoming COVID-19 response legislation to ensure that small businesses in Wisconsin can easily access the funding they desperately need. PPP is currently suspended due to a lack of funds after two weeks of very high demand, which is preventing Wisconsin small businesses’ ability to access SBA resources and keep their workers employed. Many businesses in Wisconsin have expressed deep concerns with the implementation of the program and the limits on eligibility—and Senator Baldwin is requesting that both be addressed swiftly, in addition to boosting funding for the programs.
In her letter to Senate Majority Leader Mitch McConnell, Democratic Leader Chuck Schumer, and Treasury Secretary Steven Mnuchin, Senator Baldwin calls for specific reforms to be included in upcoming COVID-19 response legislation for the PPP and EIDL programs.
- Loans must be tailored to small business need: The SBA currently restricts the forgiveness of the loan by limiting its use for rent, utility, or mortgage costs to no more than 25 percent of the total loan, which makes the PPP inaccessible for many small businesses. Baldwin is calling for the removal of these restrictions to accommodate businesses with different cost structures, while ensuring that workers are kept on payroll.
- Forgiveness must extend beyond the eight week period: The PPP restricts loan forgiveness to costs incurred in the eight week period after the loan is disbursed. Baldwin is calling for eliminating the eight week limit and transitioning to rolling monthly loan forgiveness for businesses that are forced to close by a stay-at-home order or declining revenue.
- Banks must lend to new customers and those in underserved communities: Senator Baldwin has heard from minority-owned businesses and very small businesses who are unable to access the PPP because participating banks limited loan applications to customers with whom the bank already has a lending relationship. Baldwin urges changes to PPP that will better direct loans to underserved communities.
- Appropriations for the PPP must provide certainty: The PPP ran out of its $349 billion appropriation in under two weeks and now businesses are unable to access the program and wonder if it will be renewed. As stay-at-home orders are extended nationwide, demand for the PPP will remain strong. Faith in the PPP is so crucial to economic recovery that it should not be subjected to monthly partisan fights. Extending funding for the PPP until the economy recovers would allow businesses to commit to keeping their staff paid and the business expenses paid throughout the crisis.
- The $1,000 per employee cap on EIDL funding must be eliminated: The SBA instituted a $1,000 per employee cap on loans made under EIDL. Senator Baldwin wants to replenish funding for the EIDL program and eliminate the cap to allow businesses to be eligible for the maximum $10,000 award originally intended under the CARES Act.
In her letter, Baldwin writes, “Addressing these problems with the PPP and EIDL are necessary to ensure that businesses will re-open with minimal disruption when it is safe to do so. If we allow the economy to spiral from businesses laying off workers, defaulting on their payments, and going bankrupt, the recovery will be much slower and more painful. Even if businesses are able to open after the crisis, they could fail because they don’t have any customers if everyone has been laid off. By ensuring that workers are kept on payroll, we can guarantee that businesses will have customers ready to buy their products when the economy is open again.”
The full letter is available here.