Luetkemeyer: The Next Steps for the Paycheck Protection Program
WASHINGTON, D.C. – Today, the House Committee on Small Business is holding a hybrid hearing titled "The Next Steps for the Paycheck Protection Program."
Ranking Member Blaine Luetkemeyer's opening statement as prepared for delivery:
Thank you, Madam Chair, and thank you for calling a hearing on this important topic.
The title of this hearing is “The Next Steps for the Paycheck Protection Program.” This is a particularly important topic given the fact that the PPP is set to expire on March 31st, just three weeks from today. I am interested to hear from the panel before us on how lenders and businesses view the program, areas that should be improved, and how to adjust the program moving forward.
While a discussion on next steps is critical, I want to reiterate how successful this program has been to date. With state and local shutdowns sweeping the nation to protect against the spread of COVID-19, the Small Business Administration and the Department of the Treasury implemented the PPP in a matter of days. From the day it opened in early April to the day it concluded on August 8th, 2020, the first round of PPP provided just over 5.2 million loans totaling $525 billion, with loans averaging approximately $100,000. According to the SBA, more than 50 million small business jobs were either saved or assisted by the PPP through the program’s first round in 2020.
The latest round of PPP includes a second draw loan for businesses still struggling with the pandemic and has provided approximately 2.4 million new loans for $164 billion. The average loan for this second round is just under $70,000.
Despite the success of the PPP, this program was always meant to be temporary. As a reminder, the PPP was created under the CARES Act, which was signed into law by former President Trump on March 27th, 2020. The program’s current end date on March 31st, 2021, marks almost exactly one year to the day from when it opened.
Across America, we are seeing vaccines in arms and lockdowns being lifted. These actions are allowing businesses the ability to start turning the corner and recover. The latest statistics from the SBA on the PPP reiterate these facts, as the demand for PPP loans has slowed.
Additionally, the SBA has informed lenders that on the March 31st deadline, the SBA will stop processing loans, which is very concerning. This means that even if a small business files its application and a lender submits it to the SBA before the deadline, the SBA will stop any and all processing of the loan on the 31st. I have spoken to many lenders on this issue, and instead of taking applications that will never be processed by the SBA, they are planning to shut down their PPP lending entirely before the March 31st deadline.
While the PPP has been a bipartisan product throughout its tenure – from the CARES Act, PPP Flexibility Act, and December COVID package – my colleagues on the other side of the aisle decided to make the latest COVID relief package a strictly partisan process. In their partisanship, they passed legislation that did not extend the PPP deadline, despite adding over $7 billion in funding to the PPP and increasing the applicant pool of the program. The end result is the passage of a bill seeking to beef up a program that is already winding down and will end shortly.
Given these realities, I look forward to hearing from the panel today regarding what changes we need to make within the program and what steps Congress needs to take.
Congress has important decisions to make, and it is my hope that this hearing will assist us as we tackle the topics of small business relief and small business recovery.
I want to thank all of the witnesses for joining us and I yield back.
Ranking Member Blaine Luetkemeyer's opening statement as prepared for delivery:
Thank you, Madam Chair, and thank you for calling a hearing on this important topic.
The title of this hearing is “The Next Steps for the Paycheck Protection Program.” This is a particularly important topic given the fact that the PPP is set to expire on March 31st, just three weeks from today. I am interested to hear from the panel before us on how lenders and businesses view the program, areas that should be improved, and how to adjust the program moving forward.
While a discussion on next steps is critical, I want to reiterate how successful this program has been to date. With state and local shutdowns sweeping the nation to protect against the spread of COVID-19, the Small Business Administration and the Department of the Treasury implemented the PPP in a matter of days. From the day it opened in early April to the day it concluded on August 8th, 2020, the first round of PPP provided just over 5.2 million loans totaling $525 billion, with loans averaging approximately $100,000. According to the SBA, more than 50 million small business jobs were either saved or assisted by the PPP through the program’s first round in 2020.
The latest round of PPP includes a second draw loan for businesses still struggling with the pandemic and has provided approximately 2.4 million new loans for $164 billion. The average loan for this second round is just under $70,000.
Despite the success of the PPP, this program was always meant to be temporary. As a reminder, the PPP was created under the CARES Act, which was signed into law by former President Trump on March 27th, 2020. The program’s current end date on March 31st, 2021, marks almost exactly one year to the day from when it opened.
Across America, we are seeing vaccines in arms and lockdowns being lifted. These actions are allowing businesses the ability to start turning the corner and recover. The latest statistics from the SBA on the PPP reiterate these facts, as the demand for PPP loans has slowed.
Additionally, the SBA has informed lenders that on the March 31st deadline, the SBA will stop processing loans, which is very concerning. This means that even if a small business files its application and a lender submits it to the SBA before the deadline, the SBA will stop any and all processing of the loan on the 31st. I have spoken to many lenders on this issue, and instead of taking applications that will never be processed by the SBA, they are planning to shut down their PPP lending entirely before the March 31st deadline.
While the PPP has been a bipartisan product throughout its tenure – from the CARES Act, PPP Flexibility Act, and December COVID package – my colleagues on the other side of the aisle decided to make the latest COVID relief package a strictly partisan process. In their partisanship, they passed legislation that did not extend the PPP deadline, despite adding over $7 billion in funding to the PPP and increasing the applicant pool of the program. The end result is the passage of a bill seeking to beef up a program that is already winding down and will end shortly.
Given these realities, I look forward to hearing from the panel today regarding what changes we need to make within the program and what steps Congress needs to take.
Congress has important decisions to make, and it is my hope that this hearing will assist us as we tackle the topics of small business relief and small business recovery.
I want to thank all of the witnesses for joining us and I yield back.
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