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Luetkemeyer: What Comes Next? PPP Forgiveness
WASHINGTON, D.C. – Today, the House Committee on Small Business is holding a remote hearing titled, "What Comes Next? PPP Forgiveness."
Ranking Member Luetkemeyer's opening statement as prepared for delivery:
Thank you, Madam Chair, and thank you for calling a hearing on the Paycheck Protection Program and its loan forgiveness process. With the program’s application window now closed, Members of Congress must examine the backend process that focuses on forgiveness to ensure the program concludes appropriately, prudently, and smoothly for small businesses.
Prior to the pandemic, small businesses were displaying optimism and confidence about their economic future. Through a smart tax environment driven by the 2017 Tax Cuts and Jobs Act and former President Trump’s deregulatory actions - such as cutting two regulations for every new one - these small businesses were investing in their companies, their employees, and their communities.
Unfortunately, COVID-19 and overwhelming state and local shutdown mandates devastated the nation’s smallest firms. From being closed entirely to altered capacity restrictions, these measures forced small businesses into survival mode. Not surprisingly, many small businesses adapted and performed to the best of their ability under dire circumstances - that's what they do. Federal government assistance, like the PPP, provided an avenue toward recovery and focused efforts on the nation’s more than 60 million small business workers and employees.
The PPP proved to be successful due to the efforts of private sector lenders who partnered with the Small Business Administration (SBA) and the Department of the Treasury to deliver funds to small businesses with speed and efficiency. As the program continues to shift toward forgiveness, today’s hearing will show us a different perspective from lenders who participated in the program.
If a small business adhered to the rules set out in legislation and the guidance produced by the SBA and the Treasury Department, forgiveness should be attainable. Congress examined this process in 2020 and created a streamlined forgiveness process for all loans below $150,000 in the December COVID package. The SBA has also taken steps to simplify the process on their end.
As I have been examining the SBA’s new direct forgiveness process, it has come to my attention that lenders have received multiple messages from the SBA on potential enhanced lender audits based on their participation within the direct forgiveness process or if they have not offered 2021 PPP borrowers an opportunity to move through loan forgiveness. One thing is clear – there are multiple legitimate and prudent reasons why lenders haven’t joined the SBA’s new direct forgiveness portal including the fact that some lenders have had systems and portals up and running for months, and I cannot stress this next reason enough, many lenders would like to assist their small business borrowers through the completion of this program. I will not stand by while lenders are punished for working closely with their small business borrowers. The SBA’s dismal performance and attempt at direct lending through the EIDL program should provide a warning to everyone that the SBA is ill-suited to perform many of these tasks. I will continue to watch these developments closely.
At today’s hearing, I look forward to hearing more about the relationship between the SBA and private sector lenders. Has there been an open line of communication, and where should improvements be made moving forward?
Additionally, I am also concerned about further changes to the forgiveness process that could open the program to increased levels of waste, fraud, and abuse. Granting blanket forgiveness has the potential to remove critical safeguards that are in place to ensure American taxpayer dollars are protected. PPP loan forgiveness oversight is even more important considering recent reports indicating that certain fintech lenders have been connected to many of the program’s most problematic loans. These are significant issues that I plan to continue examining closely.
As Members of Congress study the small business economic recovery, we must not ignore the barriers being enacted that will prevent small business growth in the future. At a time when most small businesses are simply trying to stay afloat, President Biden and Congressional Democrats are pushing tax increases on both the corporate and individual levels, the elimination of step up in basis on inheritance, and a slew of other harmful changes. These tax changes have implications for all small businesses, and Main Street U.S.A. should not be forced to pay for the Democrats’ outrageous and unnecessary spending agenda.
Our nation’s small businesses are already facing worker shortages and skyrocketing inflation. We should be creating an environment that allows small businesses to create jobs, expand, and grow – not perpetuating an environment that requires them to scale back.
I want to thank all the witnesses for joining us today, and I look forward to our discussion.
Madam Chair, I yield back.
Ranking Member Luetkemeyer's opening statement as prepared for delivery:
Thank you, Madam Chair, and thank you for calling a hearing on the Paycheck Protection Program and its loan forgiveness process. With the program’s application window now closed, Members of Congress must examine the backend process that focuses on forgiveness to ensure the program concludes appropriately, prudently, and smoothly for small businesses.
Prior to the pandemic, small businesses were displaying optimism and confidence about their economic future. Through a smart tax environment driven by the 2017 Tax Cuts and Jobs Act and former President Trump’s deregulatory actions - such as cutting two regulations for every new one - these small businesses were investing in their companies, their employees, and their communities.
Unfortunately, COVID-19 and overwhelming state and local shutdown mandates devastated the nation’s smallest firms. From being closed entirely to altered capacity restrictions, these measures forced small businesses into survival mode. Not surprisingly, many small businesses adapted and performed to the best of their ability under dire circumstances - that's what they do. Federal government assistance, like the PPP, provided an avenue toward recovery and focused efforts on the nation’s more than 60 million small business workers and employees.
The PPP proved to be successful due to the efforts of private sector lenders who partnered with the Small Business Administration (SBA) and the Department of the Treasury to deliver funds to small businesses with speed and efficiency. As the program continues to shift toward forgiveness, today’s hearing will show us a different perspective from lenders who participated in the program.
If a small business adhered to the rules set out in legislation and the guidance produced by the SBA and the Treasury Department, forgiveness should be attainable. Congress examined this process in 2020 and created a streamlined forgiveness process for all loans below $150,000 in the December COVID package. The SBA has also taken steps to simplify the process on their end.
As I have been examining the SBA’s new direct forgiveness process, it has come to my attention that lenders have received multiple messages from the SBA on potential enhanced lender audits based on their participation within the direct forgiveness process or if they have not offered 2021 PPP borrowers an opportunity to move through loan forgiveness. One thing is clear – there are multiple legitimate and prudent reasons why lenders haven’t joined the SBA’s new direct forgiveness portal including the fact that some lenders have had systems and portals up and running for months, and I cannot stress this next reason enough, many lenders would like to assist their small business borrowers through the completion of this program. I will not stand by while lenders are punished for working closely with their small business borrowers. The SBA’s dismal performance and attempt at direct lending through the EIDL program should provide a warning to everyone that the SBA is ill-suited to perform many of these tasks. I will continue to watch these developments closely.
At today’s hearing, I look forward to hearing more about the relationship between the SBA and private sector lenders. Has there been an open line of communication, and where should improvements be made moving forward?
Additionally, I am also concerned about further changes to the forgiveness process that could open the program to increased levels of waste, fraud, and abuse. Granting blanket forgiveness has the potential to remove critical safeguards that are in place to ensure American taxpayer dollars are protected. PPP loan forgiveness oversight is even more important considering recent reports indicating that certain fintech lenders have been connected to many of the program’s most problematic loans. These are significant issues that I plan to continue examining closely.
As Members of Congress study the small business economic recovery, we must not ignore the barriers being enacted that will prevent small business growth in the future. At a time when most small businesses are simply trying to stay afloat, President Biden and Congressional Democrats are pushing tax increases on both the corporate and individual levels, the elimination of step up in basis on inheritance, and a slew of other harmful changes. These tax changes have implications for all small businesses, and Main Street U.S.A. should not be forced to pay for the Democrats’ outrageous and unnecessary spending agenda.
Our nation’s small businesses are already facing worker shortages and skyrocketing inflation. We should be creating an environment that allows small businesses to create jobs, expand, and grow – not perpetuating an environment that requires them to scale back.
I want to thank all the witnesses for joining us today, and I look forward to our discussion.
Madam Chair, I yield back.
