NFIB's Recommendations to SBA to Ensure PPP Loans Deliver for Main Street

Date: May 07, 2020

This week, NFIB made several recommendations to the U.S. Small Business Administration and the U.S. Department of the Treasury to ensure that the Paycheck Protection Program (PPP) loans work as Congress intended for small businesses.

In a letter to the Treasury Department and the SBA this week, NFIB requested prompt guidance on loan forgiveness for the PPP that provides maximum flexibility for small business owners.

In addition, NFIB’s comments to SBA’s PPP guidance recommended changes in the following eight key areas:

  1. Eliminate the requirement to dedicate at least 75% of a PPP loan to payroll costs.
    Section 1102 of the CARES Act allows a small business to use a PPP loan for payroll costs, rent or mortgage interest payments, utility payments, and a few other uses. The SBA has no authority to issue the rule requiring the use of 75% of the loan for payroll costs.
  1. Eliminate the requirement to begin repayment of PPP loan within six months.
    NFIB is very concerned that, for many PPP loan borrowers, it is unlikely the business will have recovered sufficiently after six months to continue to pay and employ its workers and begin to pay back any unforgiven portions of the PPP loan. NFIB recommends a one-year deferment following the date of disbursement of the loan.
  1. Eliminate the requirement to pay back unforgiven amounts of PPP loans in two years.
    Although the statute would allow a period as long as ten years to pay back the remaining unforgiven portion, the SBA interim final rules give the borrower only two years. NFIB recommends extending the maturity date to five years.
  1. Eliminate prohibition on applying more than once for a PPP loan.
    The SBA Administrator has limited any small business from having PPP loans, even if the aggregate of the loans would be within the maximum statutory dollar amount. For many PPP borrowers, the eight-week period will expire before the business is able to reopen. NFIB recommends allowing recipients to apply and obtain more than one loan as long as it doesn’t exceed the maximum allowed.
  1. Do not apply penalties to small businesses for violations unless willful.
    Small businesses, especially with those with 50 or fewer employees, don’t have the lawyers, accountants, or clerks that larger businesses have. Because of that, Congress should provide that no penalty should apply to small businesses for innocent mistakes made by small business owners when applying for PPP loans.
  1. Eliminate unauthorized extensions of Treasury enforcement requirements.
    The SBA lacks authority to require non-federally regulated financial institutions to comply with the Bank Secrecy Act.
  1. Make clear the affiliation rules for section 501(c)(3) organizations.
    The interim rules do not state clear affiliation rules. NFIB recommends new language to further clarify.
  1. Make findings necessary under the Administrative Procedure Act.
    The SBA should invoke all properly applicable statutory exemptions to allow the interim final rules and the final rules to take effect immediately upon publication.

“The PPP program has been a life-line for many small business owners,” said Karen Harned, Executive Director of NFIB’s Small Business Legal Center. “Now, more than ever, small businesses need flexibility on how these loans are used, forgiven, and repaid.”

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