Questions for Secretary Steven T. Mnuchin
Summary
Questions for Secretary Steven T. Mnuchin of the Department of the Treasury from Chairman James E. Clyburn, with Treasury's written responses, following the September 1, 2020 hybrid hearing. The first question says the Select Subcommittee requested documents on the Paycheck Protection Program (PPP) on June 15, 2020, and asks for a complete response by October 8, 2020; Treasury responds that it worked with the Small Business Administration to provide additional materials. A response on underserved communities states that by August 8, 2020, 432 MDIs and CDFIs had participated, providing over 221,000 loans for more than $16.4 billion. A further question on Economic Impact Payments cites an estimate of approximately 9 million non-filers who had not received a payment.
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“Questions for Secretary Steven T. Mnuchin.”
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Questions for Secretary Steven T. Mnuchin
Department of the Treasury
Questions from Chairman James E. Clyburn (SC-06)
September 1, 2020, Hearing: Hybrid Hearing with Treasury Secretary Steven T. Mnuchin
Paycheck Protection Program (PPP)
Question:
1. The Select Subcommittee requested documents and information on PPP on
June 15, 2020, but Treasury has not provided a complete response, more than
three months after the response deadline.1 In particular, Treasury has not yet
produced complete responses to Requests 1-4 in the June 15 letter. Please
provide a complete response to these requests by October 8, 2020.
Response:
As the Department of the Treasury explained in its October 8 letter acknowledging receipt of
these post-hearing questions, Treasury appreciates the Select Subcommittee’s interest in a
broad set of issues related to the COVID-19 pandemic, including the Paycheck Protection
Program (PPP), Economic Impact Payments, the Payroll Support Program, and the Main
Street Lending Program. Treasury has devoted substantial resources to respond to each of
your inquiries, while also working with numerous other congressional committees and six
oversight bodies on other requests. This robust commitment to transparency does not occur in
a vacuum, however: Many of the professionals who are working around the clock to respond
to oversight requests from various bodies are the same professionals working around the clock
to implement and administer a multitude of programs that are offering real-time support for
hardworking Americans across the country.
Treasury’s cooperation with the Subcommittee dates back to your June 15 letter regarding the
PPP. After receiving that request, Treasury worked with the Small Business Administration
(SBA) to provide extensive information regarding all PPP loans, documents responsive to the
Subcommittee’s request, and two thorough briefings by senior SBA and Treasury officials.
Given the broad nature of the Subcommittee’s June 15 request, the breadth of information we
made available on the PPP, and the need to balance the needs and interests discussed above, we
encouraged the Subcommittee to be more specific regarding any additional information that it
believed may be necessary to further its legislative interests. Additionally, in light of the
Subcommittee sending subsequent inquiries regarding other pandemic-related matters, we
encouraged the Subcommittee to tailor or provide guidance regarding which of its many broad
1
Letter from Chairman James E. Clyburn, Select Subcommittee on the Coronavirus Crisis, to Secretary Steven T.
Mnuchin, Department of the Treasury and Administrator Jovita Carranza, Small Business Administration (June 15,
2020) (online at https://coronavirus.house.gov/sites/democrats.coronavirus.house.gov/files/2020-06-
15.Select%20Committee%20to%20Mnuchin%20Carranza-%20SBA%20re%20PPP.pdf).
requests and follow-up inquiries are most important to the Subcommittee’s work. To the extent
possible, we have worked to respond to the Subcommittee’s requests and related follow-up
inquiries in a manner consistent with our understanding of the Subcommittee’s priorities.
We hope the extensive amount of information and access to senior Treasury officials provided
to date on a variety of pandemic-related issues have been helpful to the Subcommittee’s work.
The Department remains committed to working with the Subcommittee to accommodate its
legislative needs, and we appreciate that the Subcommittee indicated through this question
that additional documents regarding the implementation of the PPP continue to be of interest.
In response, Treasury has worked with SBA to provide additional materials responsive to your
June 15 request.
Question:
2. Did any lenders or trade associations ever communicate to Treasury, directly
or indirectly, that they lacked sufficient guidance to prioritize underserved
communities in issuing PPP loans? If so, please describe in detail what was
communicated, by whom, and how Treasury responded.
Response:
While it is unclear what type of communication on this topic might be considered “indirect,” we
are unaware of any communications by lenders or trade associations to Treasury expressing that
they lacked sufficient guidance to service PPP loan applications from small businesses operating
in underserved communities.
Question:
3. Did any lenders or trade associations ever raise concerns about prioritizing
underserved communities in the PPP in light of the Equal Credit Opportunity
Act (ECOA) and ECOA’s Regulation B? If so, please describe in detail what
was communicated, by whom, and how Treasury responded.
Response:
We are unaware of any communications to Treasury from lenders or trade associations
expressing concern about prioritizing underserved communities in the PPP in light of the
ECOA and ECOA’s Regulation B. We respectfully refer you to SBA, the Consumer
Financial Protection Bureau, and the independent financial regulators, as lenders or trade
associations may have directed communications to them.
Question:
4. Did lenders or trade associations ever express any concerns to Treasury,
directly or indirectly, that limiting PPP lending to existing customers could
have a disparate impact on women or minority owned businesses, or
businesses in underserved communities? If so, please describe in detail what
was communicated, by whom, and how Treasury responded.
Response:
We are not aware of any such communications. From the outset of the PPP, Treasury and
SBA consistently urged PPP lenders to serve all eligible businesses. We encouraged all banks
to offer loans to their existing small business customers, but no Treasury official ever
suggested that banks should do so to the exclusion of new customers. The Subcommittee’s
conclusion to the contrary in its interim staff report is false and unsupported by its own
record.
To be clear, Treasury and SBA did not limit PPP lending to existing customers. Since
enactment of the Coronavirus Aid, Relief, and Economic Security (CARES) Act, Treasury
and SBA worked closely with Congress, with borrowers, and with lenders of all sizes—
including regional and community banks, Community Development Financial Institutions
(CDFIs), and Minority Depository Institutions (MDIs)—to ensure the broadest possible
segment of small businesses could access the PPP. Treasury and SBA extensively recruited
lending institutions that typically operate in underserved communities to participate as PPP
lenders. Treasury and SBA prioritized PPP participation by CDFIs, MDIs, and minority,
women, veteran, or military-owned lenders due to their critical role in reaching underserved
communities. Hundreds of CDFIs were contacted and advised of their eligibility to participate
in the PPP. Guidance was issued to all lenders asking them to redouble their efforts to assist
eligible borrowers in underserved and disadvantaged communities. This was done to ensure
that entities in underserved and rural markets, including veterans and members of the military
community, small business concerns owned and controlled by socially and economically
disadvantaged individuals, women, and businesses in operation for less than two years, all
benefited from the PPP. On July 30, 2020, Treasury and SBA participated in a roundtable
discussion with executives from MDIs; the discussion focused on the MDIs’ experiences as
lenders in the PPP, including their work to serve small businesses in low- and moderate-
income communities.
These outreach efforts targeting underserved and minority communities were successful. As
of August 8, 2020, when the PPP closed to new loan applications, 432 MDIs and CDFIs had
participated from across the country, providing over 221,000 loans for more than $16.4
billion. The program resulted in $133 billion provided to businesses in Historically
Underutilized Business Zones, accounting for more than 25 percent of all PPP funding.
Additionally, a review of census tracts indicates 28 percent of the U.S. population lives in
low- and moderate-income census tracts, and when matched against the distribution of PPP
loans, 27 percent of the PPP funds went to those tracts—in line with their representation in the
population.
Question:
5. Treasury provided an April 3, 2020, notice to certain financial institutions
that “PPP loans for existing customers will not require re-verification under
applicable [Bank Secrecy Act] requirements.”2 However, Treasury
remained silent about how to treat eligible borrowers who were not existing
customers.
a. How did Treasury intend for this guidance to impact the
treatment of eligible borrowers who were not existing customers?
b. Did Treasury consider the impact of the April 3, 2020, notice on
women- and minority-owned businesses and businesses in
underserved communities that were not existing customers of
federally insured depository institutions or federally insured credit
unions, including whether such businesses could be excluded from
the program?
c. What steps did Treasury take to ensure access to PPP for eligible
borrowers, including women- and minority-owned businesses and
businesses in underserved communities that were not existing
customers of federally insured depository institutions and federally
insured credit unions?
Response:
Compliance with the Bank Secrecy Act (BSA) is crucial to protecting U.S. national security
by combating money laundering and related crimes. The importance of complying with BSA
obligations was covered in the interim final rule originally posted by the SBA on April 2,
2020. Additionally, as your question references, on April 3, 2020, the Department of the
Treasury’s Financial Crimes Enforcement Network issued guidance to clarify how financial
institutions could continue to apply a risk-based approach to diligently adhere to their BSA
obligations amidst the challenges presented by the COVID-19 pandemic. To facilitate
expeditious disbursal of PPP funds, this guidance clarified that financial institutions could rely
on existing knowledge of their customers and the institution’s existing risk-based approach to
BSA compliance for the purpose of processing PPP loan applications. Requiring institutions
to re-verify customer information or to develop new BSA processes for PPP loans may have
delayed financial institutions from processing applications from both existing and new
customers. As part of the process for issuing such guidance, SBA and Treasury worked with
language proposed by the Department’s Community Development Financial Institutions
(CDFI) Fund office for the purpose of clarifying BSA obligations.
At the same time and since, SBA and Treasury have taken many concrete, meaningful steps to
prioritize underserved communities in this program, including by prioritizing PPP
participation by CDFIs, minority depository institutions (MDIs), and minority, women,
veteran, or military-owned lenders due to their critical role in reaching underserved
communities. For example, on April 29, to promote access to the PPP for smaller lenders and
their customers, SBA established dedicated hours from 4:00 p.m. until 11:59 p.m. EDT, when
only loans from lending institutions with assets of less than $1 billion were accepted.
Additionally, SBA and Treasury directly contacted CDFIs, encouraging them to participate
2
Financial Crimes Enforcement Network, Department of the Treasury, The Financial Crimes Enforcement Network
Provides Further Information to Financial Institutions in Response to the Coronavirus Disease 2019 (COVID-19)
Pandemic (Apr. 3, 2020) (online at www.fincen.gov/news/news-releases/financial-crimes- enforcement-network-
provides-further-information-financial).
and issued rules of eligibility for nonbank CDFIs with substantially lower thresholds than
other nonbank lenders. SBA, in consultation with the Treasury, set aside $10 billion of Round
2 funding to be lent exclusively by CDFIs, in addition to the set-asides in the Paycheck
Protection Program and Health Care Enhancement Act of $30 billion for banks and credit
unions with assets between $10 billion and $50 billion. We also hosted multiple tele-town
hall forums with trade associations representing CDFI lenders to specifically engage with
these lenders and understand how to better serve their customers in underserved communities.
To reiterate the importance of underserved communities and borrowers, on June 15, SBA
Administrator Jovita Carranza issued guidance to PPP lenders asking them to redouble their
efforts to assist eligible borrowers in underserved and disadvantaged communities to expand
economic opportunity. Moreover, SBA re-launched a dedicated online tool, known as Lender
Match, that pairs small businesses and nonprofits without existing banking relationships with
lenders so that those borrowers know where to go to access PPP funding. On July 30, 2020,
Treasury and SBA participated in a roundtable discussion with executives from MDIs; the
discussion focused on the MDIs’ experiences as lenders in the PPP, including their work to
serve small businesses in low- and moderate-income communities.
As a result of SBA’s and Treasury’s actions and continued emphasis on reaching these
communities, when the PPP closed to new loan applications on August 8, 432 MDIs and CDFIs
had participated from across the country, providing over 221,000 loans for more than $16.4
billion (more than $9.4 billion of which was approved during Round 1 of PPP). The program
resulted in $133 billion provided to businesses in Historically Underutilized Business Zones,
accounting for more than 25 percent of all PPP funding. Additionally, as noted above, a review
of census tracts indicates 28 percent of the U.S. population lives in low- and moderate-income
census tracts, and when matched against the distribution of PPP loans, 27 percent of the PPP
funds went to those tracts—in line with their representation in the population. In fact, a recent
study by the D.C. Policy Center, looking at the distribution of PPP loans in the District of
Columbia, determined that “despite accounting for only 5.9 percent of all businesses in the
District, women-owned businesses constituted 10.3 percent of establishments that received loans
above the $150,000 threshold (203 out of the 1,989 establishments that we were able to match).
Businesses owned by people of color followed a similar trend, accounting for 12 percent of the
loans, while representing just 6 percent of overall businesses in D.C. Importantly, women-
owned businesses formed 18.2 percent of loans above $5 million, and people of color-owned
businesses represented 27.3 percent of loans above $5 million.”
Question:
Economic Impact Payments
1. More than six months after Congress passed the CARES Act, Treasury has
estimated that approximately 9 million non-filers still have not received their
economic impact payment (EIP). IRS has taken a positive step by announcing
it will notify individuals who may be eligible for, but have not registered to
claim, an EIP.3 Please provide updates to the Select Subcommittee on
3
Internal Revenue Service, IRS to Mail Special Letter to Estimated 9 Million Non-filers, Urging Them to Claim
October 9, 2020, and October 22, 2020, on the number of additional non-filers
who have received their EIP.
Response:
Over the past six months, the Internal Revenue Service (IRS) has undertaken one of the most
extensive public awareness campaigns in its history. We are proud of Treasury’s and the
IRS’s work to deliver EIPs to more than 160 million EIPs in record time to individuals for
whom the IRS has sufficient information to make a payment; and we have repeatedly affirmed
our commitment to conducting further targeted outreach for those who may be eligible but
have not yet received an EIP. Dedicated professionals at Treasury and IRS have worked
tirelessly to provide much-needed economic relief to hardworking Americans across our
country.
Individuals who have not yet received an EIP at this point are largely people who do not
typically have a tax return filing obligation and for whom information is not readily available
to the IRS, such as those not receiving benefits from the Social Security Administration or
Railroad Retirement Board, or for certain dependents. As we have previously detailed to the
Subcommittee, the IRS’s efforts to reach such individuals for the purpose of encouraging
them to file for an EIP have involved working with hundreds of local and national
organizations to share information about EIPs with such citizens who may not normally file a
tax return, including seniors, veterans, and those experiencing homelessness. The IRS also
has worked with partner groups to translate and make available in 35 languages IRS
information and resources on EIPs.
Rather than estimating a number of potentially remaining EIPs, Treasury and the IRS have
focused on developing actionable information that will allow the IRS to assist individuals who
may be eligible for an EIP to claim one. To this end, the outreach effort your question
references is the product of a substantial commitment of additional resources by the IRS and
Treasury to identify individuals for whom tax return and federal benefit information was not
readily available and who may not have yet received a payment. The effort involved
examining the most significant series of tax information returns that were filed for 2018 and
2019, including Form W-2, Form 1095 (health care series), Form 1099 series (including 1099-
MISC for independent contractors and gig economy workers, and 1099-R reporting
distributions from retirement plans), Form 1098-T (tuition payments), and Form 1098-E
(student loan interest payments). As a result of these efforts, the IRS has mailed 8,863,344
letters to alert individuals of potential eligibility—the first of which were mailed on
September 17. Additionally, while we expect that many, if not the bulk, of these individuals
are eligible for an EIP, the IRS has cautioned that receipt of a letter is not a guarantee of
eligibility. This sort of innovative approach to identifying potential eligible tax rebate
recipients has never been tried before, and we are hopeful that it will identify more eligible
EIP recipients.
We want everyone who is eligible for an EIP to receive their EIP. Treasury provided the
Economic Impact Payment by Oct. 15 at IRS.gov (Sept. 8, 2020) (online at www.irs.gov/newsroom/irs-to- mail-
special-letter-to-estimated-9-million-non-filers-urging-them-to-claim-economic-impact-payment-by-oct-15-at-
irsgov).
Subcommittee with two updates in October regarding the use of the EIP non-filer portal
consistent with those requested in this question, the most recent of which was provided on
October 22. As a direct result of the extensive efforts discussed above, 8,358,100 people who
do not normally file a tax return had used the EIP non-filer portal to claim an EIP as of
November 11. Payments for eligible individuals who submit information through the non-
filer portal generally are issued within a week of submission. The IRS and Treasury will
continue to do everything else we feasibly can to raise awareness about eligibility.
Question:
2. IRS began mailing EIP letters on September 17, giving the 9 million
recipients only a very short window to claim their EIP before the October 15
deadline. Completing the filing on the IRS’ non-filer portal in that short time
period is even more daunting because many of these individuals may not
have internet access at home. Alternatives, such as public computer access or
other sources of assistance, may be limited because of the pandemic.
a. When did IRS complete the mailing of the EIP letters?
b. Will Treasury and IRS extend the October 15 deadline, as the Select
Subcommittee has recommended, to ensure those who need financial
assistance the most have an adequate opportunity to receive their
stimulus payment this year?
Response:
As your question acknowledges, the IRS began mailing these letters on September 17, a
process which was completed on September 30, 2020. With respect to the deadline for non-
filers to apply for an EIP, the IRS has extended the deadline for such individuals to use the
non-filer portal—which has been available since the spring—to November 21. The IRS is
already deeply involved in processing and programming that overlaps the 2020 and 2021 tax
filing seasons, and this extension is yet another example of the Treasury and IRS doing
everything we feasibly can to deliver EIPs to all eligible individuals.
Question:
3. Treasury has had other problems providing stimulus payments to low-income
Americans. For example, the IRS’ non-filer online tool made it more difficult
for some people to receive another important tax benefit—the Earned Income
Tax Credit (EITC). Congress never intended for stimulus checks to complicate
receipt of the EITC for individuals, but IRS required people using the non-filer
online tool to make hard-copy filings of an amended or superseded return in
order to claim their EITC. Treasury and the IRS then reversed course and
allowed those individuals to e-file.
a. How will Treasury and IRS publicize the new e-file process and
do outreach to notify commercial preparers and the public about
it?
b. Will Treasury and IRS conduct targeted outreach to those who may
not know they are still eligible for the Earned Income Tax Credit,
including proactively sending out CP094 and CP27 notices5?
Response:
The IRS’s EIP non-filer portal is intended to be used by non-filers only. Before entering the
portal and initiating prompts within the portal, taxpayers are reminded several times that those
who have a filing obligation with the IRS for tax year 2019 should not use the portal, and
instructions are provided on who should use the tool for the purpose of receiving an EIP.
These instructions are provided because information from the non-filer portal is used to
automatically generate a Form 1040, which the IRS uses to compute and send a payment.
Accordingly, consistent with IRS processes and system limitations that apply to all taxpayers,
anyone who attempts to submit a second Form 1040 must file an amended return. In August,
the IRS announced a major milestone in tax administration by making it possible for all
taxpayers—including those who improperly used the EIP non-filer portal—to submit an
amended Form 1040 electronically with commercial tax-filing software.
With respect to EITC recipients, Treasury previously informed the Subcommittee that as of
July 31, 2020—at which time EIPs had been issued to all eligible individuals for whom the
IRS had payment information—the IRS had received 24.3 million returns claiming the EITC.
This total is consistent with what was reported for the same period in 2019, particularly in
light of the fact that the 2020 tax filing season was extended by three months. Accordingly,
we believe the number of EITC claimants who tried to claim their payment through the non-
filer portal and subsequently were required to file an amended return to be relatively small.
The IRS continues to advance awareness strategies for refundable credits, including by issuing
CP09/27 notices to potentially eligible EITC taxpayers who file returns but do not claim the
credit and CP08 notices to taxpayers who file returns with one or more dependents and may
potentially be eligible for the Additional Child Tax Credit but do not claim it on their returns.
The IRS also has made available online the EITC Assistant in English and Spanish to allow
taxpayers to determine if they are eligible for EITC and for what amount they are eligible.
The IRS informs the public of this valuable tool through News Releases, Twitter, and IRS
YouTube videos. Further, the IRS hosts an annual EITC Awareness Day, which is a
nationwide collaboration with national and local partners to increase awareness of refundable
credits.
4
Internal Revenue Service, Understanding Your CP09 Notice (online at www.irs.gov/individuals/ understanding-
your-cp09-notice) (accessed Sept. 16, 2020).
5
Internal Revenue Service, Understanding Your CP27 Notice (online at www.irs.gov/individuals/ understanding-
your-cp27-notice) (accessed Sept. 16, 2020).
Questions for Secretary Steven T. Mnuchin
Department of the Treasury
Questions from Rep. Maxine Waters (CA-43)
September 1, 2020, Hearing: Hybrid Hearing with Treasury Secretary Steven T. Mnuchin
Question:
1. Does the Treasury Department require air carriers receiving CARES Act financial
assistance packages to stay current on payments to their Tier I suppliers?
a. If yes, please provide an example of language reflecting such requirement.
b. If not, why not?
Response:
Under the terms of the Payroll Support Program Agreement, the Recipient must use Payroll Support
exclusively for the continuation of payment of wages, salaries, and benefits to the Recipient’s
employees. Recipients must abide by certain other requirements as specified in applicable federal
law, including the CARES Act, and the Payroll Support Program Agreement, the form of which is
posted to the CARES Act website. For more information on the Payroll Support Program, please
see https://home.treasury.gov/policy-issues/cares/preserving-jobs-for-american-industry.
Questions for Secretary Steven T. Mnuchin
Department of the Treasury
Questions from Rep. Nydia Velázquez (NY-07)
September 1, 2020, Hearing: Hybrid Hearing with Treasury Secretary Steven T. Mnuchin
Question:
1. As the Administration was considering an eviction mortarium for renters
and homeowners, was one considered for small businesses?
Response:
The Temporary Halt in Residential Evictions To Prevent the Further Spread of COVID-19
was issued by the Centers for Disease Control and Prevention6 as a public health measure to
mitigate the spread of COVID-19. This action was taken pursuant to Executive Order 13945,
which directed certain designated agencies to explore measures necessary to fight the spread
of COVID-19 by providing assistance to renters and homeowners.
Question:
2. What was the reasoning that the Administration decided on for not
proceeding with a commercial eviction moratorium?
Response:
The Department is not aware of any current authority by the Treasury or any other agency to
grant an eviction moratorium for commercial tenants.
Question:
3. In New York, the Court System has extended the eviction moratorium for
commercial businesses until October 1st, but there’s not any certainty what
will happen after that. Has the administration had conversations with
Governors who have stated a federal commercial eviction moratorium is
needed?
a. If yes, which Governors have expressed this to the Administration?
Response:
Treasury has not had conversations with state governors on this topic.
6
85 Fed. Reg. 55292 (Sept. 4, 2020).
Question:
4. Has the Administration had conversations any commercial landlords or
any lending institutions about the topic of a commercial eviction
moratorium?
a. If yes, which commercial landlords and lending institutions?
Response:
Treasury has not had conversations with commercial landlords or lending institutions on this
topic.
Questions for Secretary Steven T. Mnuchin
Department of the Treasury
Questions from Rep. Jamie Raskin (MD-08)
September 1, 2020 Hearing: Hybrid Hearing with Treasury Secretary Steven T.
Mnuchin
Question:
1. Did you or anyone else in the Administration ever seek greater operational
control over the Postal Service in exchange for a federal loan?
a. What specific requests or demands did you make?
Response:
The Department has previously written to the House Committee on Oversight and Reform to
provide background on Treasury’s and the United States Postal Service’s (USPS’s)
discussions concerning the terms of USPS’s financing from Treasury and the Federal
Financing Bank. Treasury’s proposed financing conditions have at all times been
commercially reasonable, consistent with the law, and designed to limit taxpayers’ exposure
to losses on loans to USPS.
Question:
2. When asked if you would commit to ensuring that USPS has the funding
resources it needs to deliver the mail on time, you indicated that there’s a
signed term sheet saying USPS can draw down upon the money “whenever
they need it subject to very minimal conditions.” What are those “minimal
conditions”?
Response:
Treasury has provided a copy of this term sheet to the House Committee on Oversight and
Reform. All of the conditions in the term sheet are customary controls and disclosures, and
none are burdensome.
Questions for Secretary Steven T. Mnuchin
Department of the Treasury
Questions from Rep. Andrew Kim (NJ-03)
September 1, 2020, Hearing: Hybrid Hearing with Treasury Secretary Steven T.
Mnuchin
Question:
1. There have been many reports about the Main Street Lending Program
failing to garner the level of participation that was initially intended. How
does Treasury plan to work with the Federal Reserve to make the terms of
the lending facilities more favorable?
Response:
While take-up for the Main Street Lending Program (Main Street) has been lower than
originally anticipated, the banking system’s ability to meet credit demand has proven greater
than expected in March when we began design on the program with the Federal Reserve.
There is limited unmet credit demand according to the Federal Reserve’s Senior Loan Officer
Opinion Survey on Bank Lending Practices (SLOOS).
In the September SLOOS, loan demand from Main Street-sized borrowers was unchanged
since mid-June. Over the second quarter, a significant share of banks reported weaker
demand for commercial and industrial loans to firms of all sizes, according to the SLOOS
published in July. The report also noted that a significant share of banks reported that the
number of inquiries from potential borrowers decreased.
The Federal Reserve SLOOS data is confirmed by the September National Federation of
Independent Business Survey that showed that only 2% of businesses did not have their
borrowing needs satisfied.
Since March, Treasury and the Federal Reserve have remained flexible and responsive to both
public feedback and economic conditions. The Federal Reserve, in consultation with
Treasury, has modified the terms of lending programs since they were announced to expand
and enhance these programs and ensure broad access to credit and liquidity. We will continue
to monitor the impact of these programs and will not hesitate to act as needed to support the
economy.
Question:
2. Regarding the Main Street Lending Program, applicants are hearing from
banks that the banks are still uncomfortable with their level of risk in
participating in the Program. Is there anything that Treasury and/or the Federal
Reserve might be able to do to encourage lending to distressed applicants
under the Program?
Response:
The Main Street Lending Program is open to small- and medium-sized for-profit businesses
and nonprofit organizations that were in sound financial condition before the onset of the
COVID-19 crisis and have good post-pandemic prospects, but now need loans to help
maintain their operations until they have recovered from, or adapted to the impacts of the
pandemic.
On September 18, 2020, the Federal Reserve revised the Frequently Asked Question (FAQ)
on the Main Street Lending Program website covering the treatment of Main Street loans by
federal banking supervisors. Under the revised FAQ, supervisors will not criticize Eligible
Lenders for originating Main Street loans in accordance with the Program’s requirements,
including cases when such loans are considered non-pass at the time of origination, provided
these weaknesses stem from the pandemic and are expected to be temporary or if such loans
are part of a bank’s prudent risk mitigation strategy for an existing borrower.
Under the Main Street program, the borrower must certify that it has a reasonable basis to
believe that, as of the date of origination of the Eligible Loan and after giving effect to the
Eligible Loan, the Borrower has the ability to meet its financial obligations for at least the next
90 days and does not expect to file for bankruptcy during that time period.
Question:
3. The PPP loan forgiveness application portal opened on August 10, but just
two weeks later, SBA in conjunction with your agency, released additional
guidelines surrounding forgiveness of the pandemic loans designed to keep
workers on payrolls. When will your agency issue its final guidance on
forgiveness in order to avoid any further confusion?
Response:
Treasury has posted to its website a series of documents, including interim final rules, a set of
frequently asked questions, fact sheets, and other documents to address specific lender and
borrower questions about the program, including the loan forgiveness process. Treasury and
SBA have worked judiciously, expeditiously, and on a bipartisan basis to quickly respond to
feedback and issue necessary program guidance. For example, on October 8, 2020, SBA, in
consultation with Treasury, released a simpler loan forgiveness application (PPP Loan
Forgiveness Application Form 3508S) for PPP loans of $50,000 or less. This action
streamlined the PPP forgiveness process to provide financial and administrative relief to
America’s smallest businesses while also ensuring sound stewardship of taxpayer dollars. In
the interim final rule posted on October 8, 2020, SBA and Treasury also eased the burden on
PPP lenders, allowing lenders to process forgiveness applications more swiftly. Treasury and
the SBA will continue to provide additional guidance, as appropriate, to help small businesses
and other eligible borrowers get the assistance they need and apply for loan forgiveness.
Question:
4. You have mentioned the use of a revenue test for future rounds of aid to small
businesses. However, in order to stay alive, many small businesses have found
temporary solutions to low demand by drastically altering their business model
and producing items such as facemasks to meet urgent demand. Although
these businesses would not pass a revenue test, they will not continue to thrive
as market demands continue to shift. Can this revenue test ensure that no
businesses in need of federal aid are left behind?
Response:
The Secretary remains committed to working with Congress on a bipartisan basis to
implement additional, targeted economic assistance to those sectors of the economy hardest-
hit by the pandemic. Treasury looks forward to working closely with you and your staff to
help small businesses and their tens of millions of workers across the United States get the
critical assistance they need.
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- docs.house.gov