Photo Courtesy of Sen. Schumer’s Office
Senate Minority Leader Chuck Schumer was among the 10 Senate Democrats who signed the letter addressed to U.S. Small Business Administration Administrator Jovita Carranza and Treasury Secretary Steve Mnuchin.
By Forum Staff
Senate Democratic leaders recently sent a letter to U.S. Small Business Administration Administrator Jovita Carranza and Treasury Secretary Steve Mnuchin urging them to take steps to ensure that the most vulnerable small businesses have access to the important financial resources authorized by the Coronavirus Aid, Relief, and Economic Security Act.
The senators called on the Trump administration officials to reserve a portion of the $349 billion appropriated to the Paycheck Protection Program—a provision included in the CARES Act to provide small businesses and other entities with forgivable, low-interest, zero-fee, and fully guaranteed loans of up to $10 million—for small businesses that do not have relationships with the traditional lenders, especially those in underserved and rural markets, including businesses owned by veterans, minorities, women and businesses that have been in operation for less than two years.
According to published reports, on Friday, April 3, the first day small business owners could apply for PPP loans, large traditional banks were prioritizing existing clients that have a loan, checking account, or credit card with the institution.
Financial institutions that issue PPP loans earn a processing fee of 5 percent for loans $350,000 or less; 3 percent for loans between $350,000 and $2 million; and 1 percent for loans above $2 million. Democrats fought to include the fee structure in the CARES Act to ensure that small businesses in underserved communities, including women, minorities and veterans, as well as rural markets, are prioritized in the processing and disbursement of PPP loans.
“It is critical that underserved borrowers do not fall between the cracks in the implementation of this program. That is why Congress insisted on a tiered processing fee structure that incentivizes banks to make loans of $350,000 or less and inserted language encouraging SBA to release guidance to lenders to ensure that the processing and disbursement of PPP loans prioritizes small business concerns and entities in underserved and rural markets,” the senators wrote.
They also urged the Trump administration to authorize more lenders that have demonstrated stronger ties with underserved borrowers.
“We believe that more can be done to reach out to and authorize those lenders, such as Community Development Financial Institutions, Minority Depository Institutions, and mission-based non-profit lenders, which are best positioned to bridge the trust gap between many underserved communities and the traditional financial sector,” the pols said in the missive to Carranza and Mnuchin. “For example, a survey conducted by the Association for Enterprise Opportunity found that more than half (51 percent) of black respondents indicated they felt unfairly treated by financial institutions, compared to only 26 percent of white respondents.”
The letter was signed by Senate Committee on Small Business & Entrepreneurship Ranking Member Ben Cardin (D-Md.); Senate Democratic Leader Chuck Schumer (D-N.Y.); committee member and member of the Senate Small Business Task Force Jeanne Shaheen (D-N.H.); and Democratic committee members Maria Cantwell (Wash.), Ed Markey (Mass.), Cory Booker (N.J.), Chris Coons (Del.), Mazie Hirono (Hawaii), Tammy Duckworth (Ill.), and Jacky Rosen (Nev.).
