!

To read more about Senator Lankford’s border security policy proposal, CLICK HERE.

Lankford Asks Treasury, SBA to Adjust PPP Loan Forgiveness to Help Oklahoma Restaurants, Other Small Businesses

WASHINGTON, DC – Senator James Lankford (R-OK), along with Senator John Cornyn (R-TX), joined a bipartisan group of Senators to send a letter yesterday to Treasury Secretary Steven Mnuchin, and Administrator of the Small Business Administration (SBA), Jovita Carranza, urging changes to the loan forgiveness criteria of the Paycheck Protection Program (PPP) loans to help small businesses and particularly restaurants, which tend to have lower payroll expenses, use the program to stay afloat during the pandemic. Specifically, the Senators recommended the loan forgiveness requirement that 75 percent of the loan be spent on payroll (with 25 percent allowed to be spent on other expenses), be reduced to 50 percent or lower.

“The 25 percent threshold is problematic for several business sectors, especially those whose mortgage, rent, or utility payments constitute a large portion of fixed monthly expenses,” the Senators wrote. “If they are unable to cover these expenses, they will have to decide between keeping their doors open, at personal financial risk, or closing shop and laying off employees. These are businesses that will not recover.  Such an outcome would result in mass layoffs that would shift more Americans onto unemployment, presenting significant long-term costs to families, businesses, and states.

“We ask that you exercise the power of your respective offices to ensure all business sectors are able to spend at least 50 percent of the loan proceeds on the statutorily allowed non-payroll expenses. Access to loan forgiveness was a critical component of the CARES Act, and making it as effective as possible will help further the CARES Act’s goal of supporting small businesses while keeping American workers employed.”

Lankford and Cornyn were joined by Senators Robert Menendez (D-NJ), John Barrasso (R-WY), Dick Durbin (D-IL), Marsha Blackburn (R-TN), Chris Van Hollen (D-MD), John Boozman (R-AR), Chris Coons (D-DE), Lindsey Graham (R-SC), Richard Blumenthal (D-CT), Michael Bennett (D-CO), Cory Gardner (R-CO), Kirsten Gillibrand  (D-NY), Kelly Loeffler (R-GA), Kyrsten Sinema (D-AZ), Roger Wicker (R-MS), Ron Wyden (D-OR), Rob Portman (D-OH), Patrick Leahy (D-VT), and Cory Booker (D-NJ).

The full text of the letter is available here or below.

Dear Secretary Mnuchin and Administrator Carranza:

Thank you for your tireless work in developing and implementing the Coronavirus Aid, Relief and Economic Security (CARES) Act. This critical legislation has bolstered our country’s defense against COVID 19 and provided a critical lifeline for businesses struggling to keep their doors open.  We commend your efforts to make the Paycheck Protection Program (PPP) and Economic Interruption Disaster Loans (EIDL) as effective as possible. 

As you know, the CARES Act provided a path to loan forgiveness for funds spent on payroll and other statutorily defined covered business expenses, conditioned upon business retaining or rehiring employees. These provisions incentivize business owners to keep their employees, providing steady income for millions of Americans and limiting start-up costs after the pandemic.  However, the Small Business Administration (SBA) and Department of Treasury have created other conditions for loan forgiveness. Specifically, regulations require that at least 75 percent of a PPP loan be spent on payroll, leaving no more than 25 percent to go toward the additional covered business expenses identified in the statute.

The 25 percent threshold is problematic for several business sectors, especially those whose mortgage, rent, or utility payments constitute a large portion of fixed monthly expenses. If they are unable to cover these expenses, they will have to decide between keeping their doors open, at personal financial risk, or closing shop and laying off employees. These are businesses that will not recover. Such an outcome would result in mass layoffs that would shift more Americans onto unemployment, presenting significant long-term costs to families, businesses, and states.

We ask that you exercise the power of your respective offices to ensure all business sectors are able to spend at least 50 percent of the loan proceeds on the statutorily allowed non-payroll expenses.  Access to loan forgiveness was a critical component of the CARES Act, and making it as effective as possible will help further the CARES Act’s goal of supporting small businesses while keeping American workers employed.

Our offices stand ready to work with you in ensuring the full recovery of the US economy and that the implementation of the CARES Act is equitable to all covered business sectors. Please do not hesitate to contact us if we can assist in any way.

Sincerely,

###

Print
Share
Like
Tweet