Tag Archives: PPP

U.S. Congress approves extension of small business Paycheck Protection Program

By Richard Cowan

WASHINGTON (Reuters) – A majority of the U.S. Senate on Thursday agreed to extend the coronavirus pandemic Paycheck Protection Program (PPP) until the end of May, giving small businesses more time to apply and the government more time to process requests.

The bill, passed on a vote of 92-7, has already been approved by the House of Representatives and now goes to Democratic President Joe Biden, who is expected to sign it into law.

The PPP provides loans to small businesses struggling to survive during the COVID-19 pandemic, which has resulted in millions of businesses curtailing their operations or even shutting down for periods.

The loans convert into grants if the recipients meet certain conditions.

Without congressional action, the program would expire at the end of this month.

Senate Small Business Committee Chairman Ben Cardin said that applications could not be completed by then, adding that the $1.9 trillion COVID-19 aid approved by Congress this month expanded eligibility to more first-time borrowers, including non-profit organizations such as the YMCA.

“We are reaching the most needy,” Cardin said in a speech on the Senate floor on Wednesday urging passage of the extension.

The legislation gives the Small Business Administration 30-days, beyond May 31, to complete processing loan applications.

The PPP was designed to stanch the loss of millions of businesses, such as restaurants that were particularly hard-hit by the pandemic. Critics complained that large companies and well-to-do law firms won millions of dollars in funding, especially in the early days of the program nearly a year ago.

Republican Senator Susan Collins called the PPP “a life-line for small businesses,” saying more than $718 billion in loans already had been approved. He said it had secured tens of millions of jobs.

(Reporting by Richard Cowan; Editing by Tim Ahmann and Edmund Blair)

Biden to revise small business loans to reach smaller, minority firms

WASHINGTON (Reuters) – U.S. President Joe Biden will launch changes on Monday to the main U.S. coronavirus aid program for small businesses to try to reach smaller, minority-owned firms and sole proprietors left behind in previous rounds of aid.

Biden administration officials said that for two weeks starting on Wednesday, the Small Business Administration will only accept applications for forgivable Paycheck Protection Program (PPP) loans from firms with fewer than 20 employees to ensure that they are not crowded out by larger firms.

The changes, to be formally announced by Biden on Monday afternoon, come as small business bankers say demand for Paycheck Protection loans is slowing as firms reopen. The White House released a fact sheet outlining the changes on Monday morning.

When the PPP was launched in April 2020 at the height of coronavirus lockdowns under a $3 trillion relief bill, its initial $349 billion ran out in two weeks. Congress approved another $320 billion in May, but the program expired in August with about $130 billion in unused funds.

The program was re-launched on Jan. 19 with $284 billion in new funds from a coronavirus aid bill passed at the end of December, and a Biden administration official said about $150 billion of PPP money is still available.

But Biden administration officials said there are still many minority and very small firms in low-income areas that have not been able to receive aid.

The changes aim to make it easier for firms with no employees — sole proprietors, independent contractors, and self-employed people such as house cleaners and personal care providers — that could not qualify previously because of business cost deductions.

The Small Business Administration will revise the rules to match the approach used to allow small farmers and ranchers to receive aid, the businesses said.

The officials said the program will also set aside $1 billion for businesses without employees in low- and moderate-income areas, which are 70% owned by women and people of color.

The SBA will provide new guidance making it clear that legal U.S. residents who are not citizens, such as green card holders, cannot be excluded from the program. The Biden Administration will also eliminate exclusions that prohibit a business owner who is delinquent on student loans from participating in the program.

Business owners with non-fraud felony arrests or convictions in the previous year are excluded from the program. However, Biden administration officials said they will adopt bipartisan Senate proposals to remove this restriction, unless the applicant is currently incarcerated.

According to the White House fact sheet, the Biden administration is also improving the program’s operations by strengthening and streamlining fraud checks, revamping the loan application and government web sites that communicate with small businesses, talking more with borrowers about their needs, and deepening the government’s relationship with lenders.

(Reporting by David Lawder; Additional reporting by Lisa Lambert; Editing by Jacqueline Wong and Chizu Nomiyama)

Under government pressure, big U.S. lenders rush to launch more pandemic loans: sources

By Koh Gui Qing, Michelle Price and Pete Schroeder

WASHINGTON (Reuters) – The U.S. government is pressuring large lenders to go live this week with another round of a key federal pandemic loan program despite many unresolved issues, sparking an industry scramble to get lending platforms ready, five people familiar with the discussions said.

The Paycheck Protection Program (PPP) reopens to large lenders on Tuesday, with many big banks including JPMorgan Chase & Co, Wells Fargo & Co and Bank of America, ready to start accepting applications, their representatives said.

But with dozens of changes to the rules and government technology system, the latest round is much more complex. Some industry executives worry that the government pressure to launch with so many unresolved issues could cause a rerun of the paperwork and technology snags that dogged last year’s launch.

While the program helped millions of small businesses, last year’s problems contributed toward some needy borrowers missing out while some ineligible companies and fraudsters got funds, oversight watchdogs have said.

A spokesman for the Small Business Administration (SBA), which jointly administers the PPP with the Treasury Department, said Congress expected the latest round to be launched swiftly to get cash to needy businesses as quickly as possible.

“SBA, in consultation with Treasury, is working around the clock to fulfill this congressional desire … and urges lending partners of all sizes to continue assisting eligible small businesses,” he added in an emailed statement.

As of Friday, the industry was circulating an eight-page document, seen by Reuters, of questions on the rules, required documentation and technology processes.

“Everyone is trying to move really quickly … but it’s just really difficult to launch a $300 billion program in a few weeks. People are struggling,” said Dan O’Malley, chief executive of Numerated, which provides PPP loan processing software to banks.

“The SBA and Treasury are pushing because of the economic need. They’re just trying to do the right thing,” he added.

Last week, officials contacted large lenders to ensure they would start accepting applications on Tuesday, said one of the five people, who spoke on condition of anonymity. Another person with knowledge of the discussions said officials are also anxious to get as much cash out the door as possible before Democratic President-elect Joe Biden takes over on Wednesday.

Under the program, lenders make loans to be repaid by the government provided borrowers spend the cash on eligible costs.

Last year, lenders issued 5.1 million loans worth $525 billion. As the pandemic drags into a second year, Congress granted $284 billion more in funds and changed the rules on eligible borrowers and expenditures.

Richard Hunt, chief executive of the Consumer Bankers Association, said the industry had “dedicated thousands of bank employees to make the process as efficient as possible.”

In addition to changes to the rules for first-time PPP loans, borrowers will be allowed a second loan provided they can show a 25% hit to their revenues. To fix technology capacity issues seen last year, the SBA has introduced a new loan application technology platform for lenders.

Combined, lenders say these amount to substantial changes. As of Friday, outstanding questions ranged from how to calculate employee numbers, which revenue documents were needed and how closely lenders must review them, to how borrower affiliates should be treated and requirements for loans to be forgiven, according to the document and sources.

The second source with knowledge of the discussions said more time to iron out the wrinkles could help mitigate “bad behavior.” But the first industry source said with so much confusion over who was eligible for second-time loans, he was more worried the SBA would reject applications.

Still, some small lenders which went live last week noted they’d had longer to prepare than last year and that their experience had so far been positive. A different industry source said big banks had tested their systems over the weekend and were “cautiously optimistic” Tuesday would go smoothly.

(Additional reporting by Pete Schroeder; editing by Jonathan Oatis)

Thousands of small-business loans may have been fraudulent, U.S. House panel finds

By Susan Cornwell and David Morgan

WASHINGTON (Reuters) – Tens of thousands of loans worth billions of dollars may have been subject to fraud, waste and abuse in the $659 billion taxpayer-funded Paycheck Protection Program (PPP) aimed at helping small U.S. businesses survive the coronavirus pandemic, according to a report released by Democratic lawmakers on Tuesday.

Over $1 billion went to companies that received multiple loans, in violation of the program’s rules, the House of Representatives Select Subcommittee on the Coronavirus Crisis said.

At an afternoon hearing, the panel’s chairman, Democratic Representative James Clyburn, chided Treasury Secretary Steven Mnuchin for saying previously that delivering aid quickly made it inevitable for Treasury to run into issues of waste.

“That is a false dichotomy. Taxpayers should not have to choose between quickly getting aid to those who need it and wasting federal funds. And there are simple steps that could have been taken to improve oversight and reduce fraud,” Clyburn said.

Democrats in Congress and the Trump administration have been at loggerheads since July over further steps to bolster the economy after Congress approved trillions of dollars in March to respond to the coronavirus pandemic.

“We are sensitive to the fact that there is more work to be done and certain areas of the economy require additional relief,” Mnuchin told the committee.

The PPP provided more than 5.2 million forgivable loans through the U.S. Small Business Administration (SBA) by the time it ended on Aug. 8.

The SBA did not immediately respond to requests for comment.

The Trump administration says the PPP has saved some 51 million jobs at a time when much of the U.S. economy has been shuttered due to the coronavirus.

Economists say the actual impact is far lower, likely between 1 million and 14 million jobs.

Republicans on the committee issued their own report saying the small business loan program had avoided fraud to the extent that is typical with other large government relief programs, such as those following Hurricanes Sandy and Katrina.

The Democratic-led panel found more than 600 loans went to companies that should have been ineligible because they had been barred from doing business with the government. Another 350 loans went to contractors with previous performance problems.

Nearly $3 billion went to businesses that were flagged as potentially problematic by a government-contracting database.

Staff found evidence that as few as 12 percent of Black and Hispanic business owners received the full funding they requested.

The SBA’s internal watchdog has also found “strong indicators” of potential PPP fraud.

(Reporting by Susan Cornwell and David Morgan; Editing by Andy Sullivan, Chizu Nomiyama, Steve Orlofsky and Richard Chang)

Treasury’s Mnuchin open to blanket forgiveness for smaller business relief loans

WASHINGTON (Reuters) – U.S. Treasury Secretary Steven Mnuchin said Friday policymakers should consider blanket forgiveness for all smaller businesses that received “Paycheck Protection Program” loans.

Mnuchin told lawmakers that they should consider such an approach to reduce complexity, coupled with some form of fraud protection.

He also said the Trump administration supports adding more funds to the $660 billion program, as well as allowing especially hard-hit businesses to apply for a second emergency loan.

He did not define how small a loan would have to be to qualify for automatic forgiveness, and added it should be paired with some form of fraud protection without going into detail. Several business and banking groups have pushed for blanket forgiveness for all loans under $150,000, arguing the requirements for applying for forgiveness under the program are too complex.

His comments come as Congress is preparing further economic relief legislation to support businesses and people harmed by pandemic lockdowns. Roughly $100 billion remains in the PPP, a forgivable loan program created by the initial stimulus package, is set to expire on Aug. 8.

Mnuchin added that he would also support applying some sort of “revenue test” to future PPP loans to make sure the remaining funds go to businesses that need it the most. The PPP has come under criticism after wealthy and larger companies secured loans under the program, which was billed as relief for small businesses.

“This time, we need to have a revenue test and make sure that money is going to businesses that have significant revenue declines,” he said.

He also said he would support efforts to set aside a portion of remaining PPP funds for minority-owned businesses, amid concerns from some lawmakers that those businesses were struggling to secure funding.

(Reporting by Pete Schroeder; Editing by Nick Zieminski)

U.S. police unions approved for millions in pandemic aid

By Reade Levinson and Chris Prentice

WASHINGTON (Reuters) – At least six police unions qualified for a combined total of $2 million to $4.4 million in emergency U.S. government loans intended to help small businesses stay afloat during the coronavirus lockdown, according to data released Monday by the U.S. Small Business Administration.

The unions represent about 110,000 law enforcement officers in Philadelphia, Houston, New York state, Michigan and 11 Southern states.

All told, the six approved loans make up a small fraction of the program’s $521 billion in lending across 4.9 million loans as of June 30. The data released on Monday does not specify whether the loans were disbursed or if the unions will qualify for loan forgiveness.

Intended to help small companies and non-profit organizations keep their work forces employed during the coronavirus crisis, the federal Paycheck Protection Program allows employers with 500 or fewer workers hurt by the economic fallout of the pandemic to apply for a forgivable government-backed loan.

The six police unions typically receive 90% of their revenue from membership dues, according to tax records reviewed by Reuters, and thus, barring layoffs, would not be hurting for cash. All six unions have work forces of their own, providing support to members. Their combined loan applications said they sought to retain 331 jobs.

Four forces with unions that received loans – the New York State Police, Philadelphia Police Department, Philadelphia Sheriff’s Office and Houston Police Department – told Reuters they had not laid off or furloughed any employees during the pandemic, so their unions’ dues collections should not have suffered any significant hits.

It is clear the loan program, overseen by the Small Business Administration (SBA), gave out funds with few limits on who would benefit, said Liz Hempowicz, director of public policy at the watchdog group Project on Government Oversight.

“The onus was on the SBA to ensure we’re not just throwing public funds at entities that don’t need them,” she said. “It is common sense we’d prioritize the industries that need it most, and I don’t know that’s police unions right now.”

James Miller, spokesman for the New York State Correctional Officers and Police Benevolent Association, said the union sought a loan in anticipation of potential revenue losses and possible layoffs amid prison closures. The union, which represents about 26,000 employees and retirees, qualified to borrow between $150,000 and $350,000.

“Based on current revenue projections for the remainder of the year, we anticipate returning the loan, as it is the prudent thing to do,” he said, in an email to Reuters.

The other police unions approved for loans did not return repeated emails and calls seeking comment.

Qualifying for a loan of between $1 million and $2 million was the Southern States Police Benevolent Association, which represents about 58,000 federal, state, county and municipal law enforcement officers in eleven states. The Philadelphia Fraternal Order of Police, which represents 14,000 active and retired Philadelphia police officers and sheriff deputies, qualified to borrow between $350,000 and $1 million.

Authorized to borrow between $150,000 and $350,000 were the Police Officers Labor Council in Michigan, which represents about 350 sheriffs and police departments; the Houston Police Officers’ Union, which represents 5,300 Houston Police Department officers; and the Philadelphia Fraternal Order of Police Home Association, a separate non-profit that maintains a lodge for union meetings.

The police unions were among at least 117 public and private sector unions that applied for loans through the program. The SBA did not release the names of recipients of loans less than $150,000.

The Pennsylvania AFL-CIO, which represents about 900,000 members across industries including teaching, performing arts, hospitality, manufacturing and construction, said in an email Wednesday that it received $267,000 and plans to ask for loan forgiveness.

Many affiliate unions represent industries that have laid off members as a result of the coronavirus, Rick Bloomingdale, Pennsylvania AFL-CIO president, said in an email. Faced with declining dues, he said, the union decided to seek aid.

“We made the decision to apply for the loan to keep our people employed.”

(Reporting by Reade Levinson in London and Chris Prentice in Washington, D.C.)