Clyburn Commends Biden-Harris Administration’s PPP Reforms to Promote Equitable Access to Relief
Washington, D.C. (February 22, 2021) — Today, Rep. James E. Clyburn, Chairman of the Select Subcommittee on the Coronavirus Crisis, issued the following statement following the Biden-Harris Administration’s announcement of changes to the Paycheck Protection Program (PPP) to promote more equitable access to relief:
“I applaud the Biden-Harris Administration for taking swift action to prioritize relief for the smallest businesses and underserved communities through the Paycheck Protection Program. Today’s reforms represent a sharp departure from the previous Administration, which ignored Congress’s clear intent to prioritize the neediest small businesses. The Select Subcommittee previously found that the Trump Administration encouraged banks to limit PPP lending to existing customers and that many lenders processed loans for their wealthiest customers faster than those for the neediest. With the changes implemented by President Biden, PPP lenders will be able to focus on prioritizing the businesses that most need relief, a key step in jumpstarting our nation’s economic recovery.”
Congress established the PPP to help small businesses and non-profit organizations survive the coronavirus crisis by providing forgivable loans to cover payroll, rent, and utility payments. The CARES Act urged SBA to issue guidance “to ensure that the processing and disbursement of covered loans prioritizes small business concerns and entities in underserved and rural markets,” including businesses owned by veterans, members of the military community, socially and economically disadvantaged individuals, and women. The 2021 Consolidated Appropriations Act required SBA to “issue guidance addressing barriers to accessing capital for minority, underserved, veteran, and women-owned business concerns for the purpose of ensuring equitable access to covered loans.”
On October 16, 2020, the Select Subcommittee issued a report finding that under the Trump Administration, Treasury, SBA, and several large financial institutions failed to implement PPP as Congress intended, resulting in minority and women-owned businesses facing obstacles to access PPP loans.
The Select Subcommittee’s investigation revealed that the Trump Administration privately encouraged banks to limit their PPP lending to existing customers—excluding many minority and women-owned small businesses that are less likely to have a pre-existing banking relationship. Under the Trump Administration, SBA and Treasury also failed to issue guidance called for by Congress to prioritize underserved markets. In addition, several lenders processed bigger PPP loans for wealthy customers at more than twice the speed of smaller loans for the neediest small businesses.
The Select Subcommittee’s report also made several recommendations to help refocus the PPP on small businesses that truly needed relief.
Today, the Biden Administration announced several PPP reforms that, consistent with the Select Subcommittee’s recommendations, promote equitable access to relief. These changes include:
- Implementing a two-week period during which only businesses with less than 20 employees can apply for a PPP loan;
- Offering more financial support to sole proprietors, independent contractors, and self-employed individuals;
- Removing a restriction that prevented small business owners with prior non-fraud felony convictions from obtaining a PPP loan;
- Eliminating a prior restriction that prevented small business owners who are delinquent on their federal student loans from obtaining relief; and
- Ensuring access for non-citizen small business owners who are U.S. residents by issuing clear guidance that they may use Individual Taxpayer Identification Numbers to apply for a PPP loan.