Tuesday, October 4, 2022

OBA joins colleagues in asking to simplify PPP’s loan forgiveness policy

The OBA has joined two different groups of trade associations in asking the Trump Administration to simplify the confusing forgiveness process for PPP loans.

“As this issue of the Oklahoma Banker goes to press, we’re waiting for President Trump to sign H.R. 7070, the Paycheck Protection Program Flexibility Act,” OBA Executive Vice President/Government Relations Adrian Beverage said. “The Senate approved the House bill by a unanimous voice vote on June 3, and it will help us make some progress in simplifying the forgiveness process. But more needs to be done.”

Beverage noted H.R. 7010 does a number of things:

Expands the time for small businesses to use PPP funds from eight weeks to 24 weeks.

Reduces the SBA’s arbitrary rule dealing with payroll costs from 75 to 60%.

Expands from two to five years the maturity for PPP loans with a remaining balance after forgiveness has been approved.

Revises the tax deferral period for PPP loans by eliminating a provision that made a PPP borrower ineligible to defer payroll tax payments if the borrower had indebtedness forgiven.

Establishes a “safe harbor” for borrowers who are unable to rehire employees because they were making more money from enhanced unemployment insurance than they would have from their same jobs.

In addition, the OBA has signed on to a letter with its colleagues from 51 state bankers associations addressed to Treasury Secretary Steve Mnuchin and Small Business Administrator Jovita Carranza asking them to establish a de minimis standard below which PPP loans would automatically be forgiven.

“The forgiveness process outlined in recent guidance from the Small Business Administration is unnecessarily burdensome on the nation’s small businesses,” the letter said. “It is in the best interest of small business owners, taxpayers and the policy objectives established by Congress to make the loan forgiveness process easier and less technical for smaller borrowers, whose businesses are already at greatest risk because of COVID-19.”

“We’ve also sent a separate letter to (Secretary) Mnuchin and (Administrator) Carranza asking for help on this issue,” Beverage said. “This letter was also signed by the State Chamber of Oklahoma and the local chambers of commerce in Tulsa, Norman, Enid and Ardmore.”

Beverage also noted Oklahoma bankers have continued to be engaged in this program designed to help small businesses across the state get back on their feet.

“Through the end of May, Oklahoma banks have made 61,412 loans for a total of well over $5 billion,” Beverage said. “In total across the country, the (PPP) program has made 4,475,599 loans through the end of May for more than

$510 billion – 44 percent of which loans were made by community banks. That’s impressive, but we’re not done yet. There is still money available.”

Meanwhile, Oklahoma Rep. Kendra Horn (D-5th) has signed on to a bipartisan letter asking the Senate to enact legislation that would make PPP loans of $350,000 or less automatically forgiven.

“And finally, we’ve asked Senators Inhofe and Lankford to sign on to a letter authored by South Dakota Sen. Mike Rounds, which also pushes for a simpler process of forgiveness of smaller loans,” he said. “Sen. Rounds clearly set forth the purpose of the CARES Act – to get immediate funding into the hands of the nation’s small businesses and keep their employees on the payroll. He also pointed out as follows:

While the Small Business Administrator was also given the ability to require additional documentation necessary to verify proper use of PPP funds, we believe it is beyond the program’s intent to require the information solicited in the 11-page forgiveness application that the Small Business Administration (SBA) recently released. We appreciate the interest in appropriately auditing the use of government money. However, the loan forgiveness application – which understandably needs more information for loans worth significantly more than $250,000 – is three times longer than the original application for the PPP.

“We’re pushing everywhere we can in an effort to make this forgiveness process simpler,” Beverage said. “We need additional legislative changes, and we’re working hard on that approach as well. It’s an ‘all-hands-on-deck’ moment for us, and it will continue to be that way until we have explored every opportunity that’s available.”