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Rubio Releases Update on Paycheck Protection Program: More Than $5 Billion in Relief Approved
Miami, FL — U.S. Senator Marco Rubio (R-FL), Chairman of the Senate Committee on Small Business and Entrepreneurship, released an update on the Paycheck Protection Program, which went live Friday morning. According to Jovita Carranza, Administrator of the U.S. Small Business Administration (SBA), 17,503 loans valued at more than $5.4 billion were approved as of 7:30 PM EDT Friday.
“Just last week, Congress passed and President Trump signed the Paycheck Program into law,” Chairman Rubio said. “Yesterday, just days after becoming law, small businesses across the country received billions of dollars in Paycheck Protection Program loans. Nearly all of the lending completed yesterday came from existing 7(a) small business lenders like community banks. As I argued when I first proposed to use the SBA’s guarantee programs to get assistance to small businesses quickly, these community banks were ready to go on day one. Their actions yesterday saved hundreds of thousands of jobs.”
“The speed with which the administration stood up this program is an incredible feat, but it’s also important for a little patience and a little honesty,” Chairman Rubio continued. “When you launch something this unprecedented and far-reaching just seven days after it becomes law there will inevitably be problems. The good news is that every problem we saw yesterday can be fixed. I am on the phone constantly with Treasury, the SBA, and bankers across the country and all across Florida to make sure it gets better each day we move forward.”
The SBA and the U.S. Department of the Treasury released additional guidance last night that can be found on Treasury’s website here and SBA’s website here.
Day One Concerns with Remedies:
- Large Bank Existing Customer Policy: On Friday, there were reports of large banks declining applications unless the business owner had previously taken out a loan or a credit card from the lender. Business owners that have had 20-year relationships had their loan applications denied. Some larger banks are only accepting PPP applications from individuals with prior relationships at the bank.
- Holding Loans: Bank and nonbank lenders are concerned about the interim final rule requiring lenders to hold loans for seven weeks before they can be purchased by the government. Community banks and FinTech lenders need a liquidity or purchase market to continue to make loans to small businesses, especially considering the demand that occurred today and is expected to continue.
Solution: Chairman Rubio called for the new Federal Reserve lending facility to ensure community banks and FinTechs have the liquidity they need to continue to make PPP Loans.
- Affiliation Rules for Businesses and Nonprofits: Lenders are requesting clear guidance on the application of SBA affiliation rules to businesses, including the now eligible 501(c)(3) nonprofit entities, which have not previously been eligible for 7(a) loans.
Additional Outstanding Issues:
- Independent Contractor Eligibility: The interim final rule has contradicting guidance determining whether business owners should include independent contractors’ 1099s in their payroll cost calculation. Chairman Rubio’s staff has communicated this contradictory information to the SBA.
- Technology Issues: Some lenders have reported the SBA’s internal system for loan application processing, called E-Tran, has been slow. This is to be expected with the volume of loan applications to be processed. The SBA has contracted with a third-party provider to ensure the E-Tran system issues are worked out and addressed as they come up. Additionally, some community banks have reported issues with accessing the online portal, by which SBA will provide access to non-SBA lenders. The SBA is working through the issues to get everyone online.
- Money: Based on demand, it is clear that Congress will need to appropriate additional money for this program. Based on initial calculations, and as more lenders begin to participate in PPP, funding for the program could run out before the end of the covered period, which is June 30, 2020. Chairman Rubio has committed to working with his colleagues to provide additional funding for PPP.