Letter to SBA Administrator Carranza (April 2, 2020)

Summary

A letter dated April 2, 2020 from United States Senators Charles E. Schumer, Ben Cardin, Christopher A. Coons and Bernard Sanders to Jovita Carranza, Administrator of the U.S. Small Business Administration. Following a phone call, it urges swift guidance on implementing the small business programs in the CARES Act. The letter lists priority issues with questions on the Paycheck Protection Program timeline, Treasury's expansion of the 7(a) lender network, weekly reporting on loans, nonprofit eligibility including Puerto Rico nonprofits and houses of worship, and affiliation rules. It also asks how SBA will ensure disadvantaged and underserved businesses receive assistance, how debt relief for SBA borrowers will be implemented, and whether staff can award the $10,000 emergency grant within 3 days of an application.

Summary drafted by a model from the document's text below and checked by script against that text before publication. It is a navigation aid, not a reading of what the document proves. Where AI is used

Full text

                                  WASHINGTON, DC 20510-3203



                                         April 2, 2020

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


Dear Administrator Carranza,

        We write to thank you for our recent phone call to discuss the implementation of the
Small Business Administration’s (SBA) critical programs to help the nation’s small businesses
and nonprofits stay afloat during this unprecedented crisis. COVID-19 has wreaked havoc on
employers and their workers across every industry and in every corner of the nation. So many of
our small businesses operate at close margins and have limited ability to absorb the kind of
significant hit to revenues that this pandemic has caused. As we conveyed, and as we know you
understand, a swift implementation is required of the small business assistance Congress
included in the Coronavirus Aid, Relief, and Economic Security Act (the CARES Act).

        In follow-up to our conversation, we wanted to further reiterate our urgent request for the
release of guidance that both reflects Congress’ intent in the CARES Act and that offers clarity
and certainty to small businesses and nonprofits on how they can receive timely assistance from
the SBA. Included below is a list of priority issues we discussed for consideration as SBA
develops guidance.

Implementation Timeline
    So many small businesses and nonprofits have weeks, if not days, before they go under.
      We need swift implementation of the various SBA programs in the legislation. While we
      appreciate that the Administration has committed to the first Paycheck Protection
      Program (PPP) loans being processed this Friday, we want to stress the need for clarity
      on how businesses can access these programs and lenders can facilitate the loans. Can
      you confirm when detailed guidance will be finalized and how this information will be
      shared with small businesses and organizations so they are aware? Can you confirm that
      as of this Friday, any eligible small business or nonprofit will be able to work with a
      certified SBA-7(a) lender to begin a PPP loan application?

Treasury Expansion of 7(a) Lender Network
    As you know, this legislation authorized Treasury to designate many more financial
       institutions as new SBA eligible lenders. The PPP loan program’s success rests on this
       expansion of SBA’s lending network. Can you provide details on how SBA is
       coordinating with the Treasury Department to expedite the addition of new lenders to the
       certified SBA 7(a) lenders network? Related, what kind of steps are being taken to get
       information to our constituents on how these programs will work and where and when
       they can begin applying? How can a small business or nonprofit learn if their bank is
       eligible to process a loan and if not, where to locate an eligible financial institution to
        work with? We want to avoid a situation where small businesses do not know where to
        go to access these critical loans. In fact, we were encouraged by discussion of a hotline
        that small businesses and lenders can call if they encounter any complications or have
        additional questions. Will such a hotline be put in place? How will you ensure adequate
        staffing is available so wait times are minimal?

Reporting on Loan Program Results
    We want to have a close understanding of how many loans are being made, who is
      receiving the loans, and how quickly funding is being drawn down in case Congress must
      act quickly in considering more funding for these programs. Can you commit to a weekly
      report on this information?

Nonprofit Eligibility
   We have heard many concerns from our nonprofits that the SBA’s affiliation rules may
     prevent them from receiving assistance. How strictly will the SBA apply the affiliation
     rules to these programs during this crisis? Will the SBA address these concerns in the
     guidance for implementation? Can you provide clear direction to the nonprofit
     community on who may be eligible or not based on these affiliation rules? If so, when?

      It has also been brought to our attention that thousands of nonprofits in Puerto Rico may
       be ineligible under the 501(c)(3) eligibility standard included in the Paycheck Protection
       Program. The issue is that Puerto Rico’s nonprofits register their status locally and not
       with the IRS, which technically means they are not 501(c)(3). This runs against
       Congress’ intent for most charitable nonprofits, with up to 500 employees, to qualify for
       this program. Nonprofits in our territories cannot be left out of this program because of
       this technicality. The SBA should consider evidence in determining 501(c)(3) eligibility
       that considers nonprofit organizations or entities that are organized or doing business
       under State law. Will the SBA address this issue in guidance?

      We are concerned that the SBA may rule houses of worship as ineligible for SBA’s
       Paycheck Protection Program. There are reasons that require a thoughtful application of
       the agency’s rules for houses of worship, but we also want to stress, to the extent legally
       possible, the need to support these institutions as 501(c)(3) organizations the CARES Act
       made eligible. How will the SBA address this in its guidance?

Affiliation Rules
    In addition to how affiliation rules may negatively impact nonprofits, we are also
        concerned that some genuine small businesses that have a relationship with investors may
        be left out of PPP loans due to affiliation rules. We are also concerned that lenders and
        the SBA could be hindered by the lack of clarity in the rules as they stand because they
        are cumbersome, complex and in some cases subjective. Will the SBA issue swift
        guidance that has brighter lines and additional clarity to resolve confusion with regard to
        the eligibility of small businesses with minority investors in order to better inform
        applicants and avoid leaving out small businesses with a credible need?

Ensuring Small, Disadvantaged, and Underserved Businesses Receive Assistance
    We are very concerned about the limited funding provided to the SBA’s PPP loans being
      drawn down quickly, especially given the provisions for franchises, big hotels and
      restaurants. What protocols are you putting in place to monitor the use of funds?

      Given these funds are first-come, first-serve, how are you ensuring that independent and
       community small businesses without the resources of larger companies are getting the
       assistance they need to access the program?
      How will you ensure disadvantaged and underserved businesses are receiving assistance
       from this program, not just bigger businesses taking advantage of provisions that waived
       rules for franchises, big hotels and restaurants?

Debt Relief for SBA Borrowers
    The CARES Act included a provision to provide debt relief for six months to existing and
      new SBA borrowers. We view this as a forceful but simple step to stabilize the existing
      portfolio and enabling SBA lenders to focus on making new loans. It is our view that
      borrowers need not complete any paperwork to receive this benefit. Do you agree? What
      are your plans for notifying lenders and borrowers about this provision and for
      implementing it quickly?

Emergency Economic Injury Grant
   The CARES Act included a requirement that a $10,000 grant be awarded within 3 days of
     an application to the SBA’s Economic Injury Disaster Loan program to help cover
     operating expenses while waiting for the loan processing. Are SBA staff prepared to
     fulfill this requirement?

        By no means is this list comprehensive of the many issues that must be considered in
implementation of the SBA’s programs included in the CARES Act. We hope that you will
closely consider each of these topics and others that we will engage with you on in the days,
weeks, and months ahead to ensure SBA is implementing the programs according to
Congressional intent and in such a way that can best serve the nation’s small businesses and
nonprofits.

      We once again thank you for your tremendous efforts in response to this national
emergency and look forward to continued partnership.

                                         Sincerely,




Charles E. Schumer                                                 Ben Cardin
United States Senator                                              United States Senator




Christopher A. Coons                                               Bernard Sanders
United States Senator                                              United States Senator


File and source

File

2020-04-02_cardin-schumer-sanders-to-sba_cardin-schumer-sanders-and-coons-call-on-sba-to-quickly.pdf

Size

222,487 bytes

SHA-256

03083cdb2ce6194be63abf12adda835adc5da4bbed06138e6a170504c3c2bc31

Our copy

2020-04-02_cardin-schumer-sanders-to-sba_cardin-schumer-sanders-and-coons-call-on-sba-to-quickly.pdf

Original

No public link identified.