Letter to SBA Inspector General Hannibal 'Mike' Ware Requesting Investigation into PPP Lender Prioritization

Summary

A letter dated April 23, 2020 to Inspector General Hannibal "Mike" Ware of the U.S. Small Business Administration. The signature block names Charles E. Schumer, Sherrod Brown and Benjamin L. Cardin, United States Senators. The letter asks the Inspector General to investigate reports that certain lenders in the Paycheck Protection Program prioritized applications of larger and wealthier clients over smaller businesses. It notes that Congress set aside $60 billion for smaller entities and asks for a recommendation by May 8, 2020 on SBA rules, regulations, policies, and procedures.

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“Letter to SBA Inspector General Hannibal 'Mike' Ware Requesting Investigation into PPP Lender Prioritization.” Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/committee-8c8054ac2ce128f5/, SHA-256 6c64c1f008259141e5318d9f389d4c026fd96da5a971490f8bc58ded8e3a205f.

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WASHINGTON, DC 20510-3203

                                          April 23, 2020

The Honorable Hannibal "Mike" Ware
Inspector General
U.S. Small Business Administration
409 3rd Street, S.W., Suite 7150
Washington, DC 20416

Dear Inspector General Ware:

We write to request that you investigate reports that certain lenders participating in the Small Business
Administration’s (SBA) Paycheck Protection Program have prioritized the applications of their larger and
wealthier clients to the detriment of smaller business adversely impacted by the coronavirus pandemic.

According to these reports, some private and commercial banking customers received special treatment from
their banks when applying for Paycheck Protection Program, including “concierge”-type services that provide
personalized assistance filling out paperwork and fulfilling other administrative requirements. At the same
time, many retail customers, including smaller business that are at greater risk because of the pandemic, have
struggled to receive timely assistance from their banks to help complete their applications and receive these
much-needed funds.

Although the intent of the Paycheck Protection Program is to provide expeditious relief to struggling small
businesses, in order to encourage their participation, banks are compensated for processing loans under the
program and are entitled to fees, which are payable upon issuance of the loan. In addition, the banks benefit
from a 100 percent loan guarantees and may use the loans as collateral to receive low cost term funding from
the Federal Reserve. It is therefore essential that the most hard-hit businesses and underserved small
businesses—including rural small businesses, minority-owned small businesses, and women-owned
businesses—receive assistance as quickly as possible from any eligible lender. The lack of a prior relationship
with a larger bank should not stand in the way of lending to small businesses that are truly small, unbanked,
underserved, minority or woman-owned. It is for that reason that Congress set aside $60 billion for smaller
entities. During this national emergency, all banks should open their doors to all small businesses in this time
of need.

Accordingly, we ask that your office immediately review the implementation of the Paycheck Protection
Program by SBA-eligible lenders and determine how the choices of these lenders impact the program’s policy
goals of targeting aid to the small businesses that need it most. We also ask that you provide recommendation
by May 8, 2020 on SBA’s current rules, regulations, policies, and procedures to ensure small businesses get the
money they need and are treated fairly by any lender participating in the Paycheck Protection Program.

                                               Sincerely,

______________________                 ______________________                  _______________________
Charles E. Schumer                     Sherrod Brown                           Benjamin L. Cardin
United States Senator                  United States Senator                   United States Senator

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