WASHINGTON, D.C. – Today, Congresswoman Doris Matsui (D-CA), a senior member of the House Energy and Commerce Committee, sent a letter to banks and financial institutions in Sacramento, urging them to ensure that the small business aid funding in the Coronavirus Aid, Relief, and Economic Security (CARES) Act is distributed as swiftly as possible.
The CARES Act, which allocated over $2 trillion to help the American economy through the current COVID-19 crisis, included a $349 billion infusion for small businesses through the Paycheck Protection Program (PPP). There have been several issues with the distribution of PPP loans preventing small businesses from receiving the support they need to pay employees and maintain operations.
The PPP provides cash-flow assistance through 100 percent federally guaranteed loans to employers who maintain their payroll during this emergency. If employers maintain their payroll, the loans will be forgiven, which will help workers remain employed, as well as help affected small businesses recover quicker after the crisis.
With the depth of the current crisis, Congresswoman Matsui is calling upon the region’s lenders to open up their lending criteria and immediately provide loans to small businesses affected by the COVID-19 pandemic.
Full text of the letter is below:
As we work to prevent irreparable economic damage from the spread of COVID-19, it is critical that lending institutions are doing everything in their power to guarantee that the disaster response funding provided in the Coronavirus Aid, Relief, and Economic Security (CARES) Act is made available to small businesses as immediately. I urge you to take immediate action to ensure your lending criteria for the paycheck protection program (PPP) loans are as open and streamlined as possible.
As part of the CARES Act, Congress provided $349 billion in funding for forgivable loans to small businesses to help pay their employees during the COVID-19 pandemic. The broad eligible uses for these loans allow small business owners to cover employee salaries, paid sick and medical leave, mortgage interest, rent, and utility payments. These loans are a central component of the federal response to COVID-19 and are intended to be widely available and administered quickly. Unfortunately, I have heard alarming feedback from small business owners in my district who report that their applications have been denied on the basis of restrictive PPP loan criteria established by individual banks or lending institutions. In the middle of a public health crisis, this is simply unacceptable.
For the PPP loans to work as intended, they must get to small businesses as quickly as possible. When banks or lending institutions restrict these loans to existing customers and those with active lines of credit, credit cards, or business loans, they undercut the effectiveness of the PPP loans and risk exacerbating economic damage in the Sacramento region. Unnecessarily narrow lending standards will limit the amount of federal funding that flows to our community and will lead to more lay-offs and business closures. The PPP loans provided by Congress in the CARES Act are federal-backed and meant to be provided to those who need them most. In light of widespread PPP loan application rejections throughout the Sacramento region, I call on you to immediately re-evaluate your lending criteria for this crucial federal program.
Thank you for your attention to this urgent matter. I look forward to working with you to ensure all who need a PPP loan receive it as quickly as possible.
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