Another phase from the Paycheck Protection Program (PPP) should be more focused and really should provide loans on a \”more targeted\” basis to assist the companies that need it most, U.S. Treasury Secretary Steven Mnuchin said during a Committee on Small Business hearing on Friday (July 17).
\”A next phase of relief should extend the PPP, but on the more targeted grounds for smaller companies and people who are specifically hard-hit, for example restaurants, hotels and other travel and hospitality businesses,\” Mnuchin said throughout the hearing.
He also stated that he didn't mean to imply that companies in those sectors were the only ones significantly impacted by the pandemic, but that the government need to look at a company's sales before issuing another iteration of the PPP.
\”I think this time around, we need to have a revenue test and ensure that money is likely to businesses that have significant revenue declines. That's something Congress didn't have in the first provision,\” Mnuchin noted.
He had previously asserted any extension relating to the loan program would be \”much, much more targeted to the businesses that really need this money and also the small enterprises.\”
U.S. Sba (SBA) Administrator Jovita Carranza noted the PPP loans provided \”much-needed fiscal relief to America's small businesses.\”
\”We administered this first-of-its-kind program by having an eye toward equity, recognizing that this pandemic continues to be particularly bad for socially and economically disadvantaged businesses,\” Carranza said.
She said that thousands of new lenders have mobilized, including lending institutions, community banks and FinTech firms.
But Mnuchin acknowledged the shortcomings from the PPP rollout.
\”As you may expect having a program of this magnitude executed on the national scale rapidly, we initially experienced some complications. We resolved them quickly. To implement the program, our teams work with members of Congress on a bipartisan basis to issue rules and guidance to provide clarity. By standing up the program quickly, i was able to support millions of jobs,\” Mnuchin noted.
The U.S. Treasury and SBA have issued and refined a group of guidelines that determine who's eligible and who isn't – and just what transpires with companies that shouldn't have gotten those loans, for example public firms, arguably at the expense of smaller companies that desperately needed the financial support.
In a scathing report issued on June 25, the U.S. Government Accountability Office (GAO) asserted the rushed rollout of the PPP led to \”confusion and questions about this program program integrity concerns.\”
The agency cited the requirement for more clarity regarding \”good faith necessity certifications.\” To speed up the distribution of funds, the government allowed lenders to consider borrowers' word for things when determining eligibility for PPP forgiveness loans.
Mnuchin acknowledged there were \”provisions in the existing act\” that made the forgiveness process \”complicated.\” He noted, \”We look forward to working with this committee and the Senate Small Business Committee to simplify the process.\”
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