Smbliq A 066 Afsa Letter To Velazquez Luetkemeyer Re PPP Forgiveness 2021 11 16

Summary

In a November 16, 2021 letter to Chairwoman Nydia M. Velázquez and Ranking Member Blaine Luetkemeyer of the Committee on Small Business, the American Financial Services Association asks that it be included in the record of the hearing with Small Business Administrator Isabella Casillas Guzman. The letter says AFSA members, state-licensed installment lenders and vehicle finance companies with fewer than 500 employees, took PPP loans and used them for payroll, but many of their forgiveness applications are being denied. It says that in mid-April last year the SBA adopted a narrower interpretation of eligibility than the CARES Act. It urges Congress to instruct the SBA to clarify that finance companies are eligible for PPP loan forgiveness. Celia Winslow, Senior Vice President, signs.

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Full text

November 16, 2021

The Honorable Nydia M. Velázquez                                       The Honorable Blaine Luetkemeyer
Chairwoman                                                             Ranking Member
Committee on Small Business                                            Committee on Small Business
House of Representatives                                               House of Representatives
Washington, DC 20515                                                   Washington, DC 20515


Dear Chairwoman Velázquez and Ranking Member Luetkemeyer:

On behalf of the American Financial Services Association (AFSA)1, we appreciate your hearing entitled, “A
Discussion with Small Business Administrator Isabella Casillas Guzman” and respectfully request that this
letter be included in the final committee record of the hearing.

The Small Business Administration (SBA) has worked hard over the last year assisting businesses who have
been struggling as a result of the pandemic. The Paycheck Protection Program (PPP) has kept so many
businesses, including many of AFSA’s members, afloat during this difficult time.

Now, Congress should instruct the SBA to clarify that finance companies are eligible for PPP loan
forgiveness, as directed by Congress.

AFSA’s members, like so many businesses across the country, faced sudden and dramatic revenue shortfalls
last year. Instead of furloughing staff, those businesses with fewer than 500 employees applied for – and got –
loans through the PPP. AFSA members took these loans with the understanding that the loans would be
forgiven, provided that the companies followed the PPP guidelines. Our members, who are state-licensed and
state-regulated installment lenders and vehicle finance companies, used the PPP money to cover payroll costs,
as prescribed by the Coronavirus Aid, Relief, and Economic Security Act (CARES Act).

At this time, these businesses are applying for PPP loan forgiveness. However, and contrary to the will of
Congress, many of their applications for forgiveness are being denied. Under normal circumstances, our
members do not qualify for SBA loans, but these are not normal times, and the PPP is a different program than
the SBA’s 7(a) program, with different objectives and criteria. Congress must instruct the SBA to fulfill
Congress’ mandate and clarify that finance companies, particularly vehicle finance companies and installment
lenders, are eligible for PPP loan forgiveness.

The CARES Act states that any business with under 500 employees is eligible for PPP loans. Despite Congress’
clear intent, in mid-April last year the SBA adopted a narrower interpretation, thereby resulting in some SBA
lenders questioning the eligibility of vital businesses, such as installment lenders and vehicle finance
companies.




1
  Founded in 1916, AFSA is the national trade association for the consumer credit industry, protecting access to credit and consumer
choice. AFSA members provide consumers with many kinds of credit, including direct and indirect vehicle financing, traditional
installment loans, mortgages, payment cards, and retail sales finance.
Traditional installment lenders provide loans to individuals and families. Their customers are medical
technicians, teachers, lawn-service employees, lawyers, stay-at-home parents, childcare workers, and farmers.
In short, they are Americans of almost all walks of life and socioeconomic classes.

Similarly, vehicle finance companies help increase levels of financial inclusion and mobility. Vehicle
ownership increases the number of jobs available to an individual and provides job stability, as well as assisting
with day-to-day tasks that are much more difficult without a car, particularly during a pandemic.

In fact, these businesses are so important, the Department of Homeland Security’s Cybersecurity and
Infrastructure Security Agency (CISA) deemed “financial services and lending services” to be a vital
component in the nation’s critical infrastructure at the onset of the pandemic.2

All sorts of entities who are not generally eligible for SBA loans, such as casinos and lobbying firms, are
eligible for PPP loans. We urge Congress to instruct the SBA to make it clear that finance companies who meet
the CARES Act requirements be granted PPP loan forgiveness. Thank you for all you have done for America’s
small businesses during this challenging time. Please do not hesitate to contact me at 202-776-7300 or
cwinslow@afsamail.org with any questions.

Sincerely,



Celia Winslow
Senior Vice President
American Financial Services Association


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