CULPEPER STAR-EXPONENT, CLINT SCHEMMER

In the wake of a botched rollout, U.S. Rep. Abigail Spanberger is pressing the U.S. Treasury to cut red tape for American small businesses seeking emergency COVID-19 relief from the federal government.

With a Wisconsin Republican legislator and a New Jersey Democrat, she led seven additional House members in demanding that the Small Business Administration rescind burdensome requirements they say it imposed on emergency loans provided under the Coronavirus, Aid, Relief and Economic Security (CARES) Act.

The restrictions fly in the face of what Congress intended when it created the SBA’s Paycheck Protection Program, the lawmakers said.

In an interview with the Culpeper Star-Exponent last week, Spanberger stressed that she wants the program’s problems fixed immediately, saying there is no time to waste.

Larger lenders have been slow to implement the program and make loans to small businesses, the 7th District Democrat said.

“People are hurting,” she said. “They fear losing businesses that they have created and built up. For a small mom-and-pop shop, this is their dream. It represents more than a paycheck. And many small businesses have shut down to keep their communities safe.”

The SBA’s unexpected, last-minute stipulations about loan forgiveness “could mean the difference between a business successfully reopening or permanently closing its doors,” Spanberger said in a statement with Reps. Mike Gallagher (R-WI-08) and Josh Gottheimer (D-NJ-05).

To receive loan forgiveness, the SBA required small businesses applying for PPP loans to spend 75 percent of the loan on maintaining payroll. Congress didn’t include such a demand when passing the CARES Act.

“Without this loan forgiveness, the PPP is merely another loan that would save a business now to watch it sink into debt later,” the legislators told the Treasury Department.

The SBA’s guidance on this and other issues is unclear, they said.

Small business owners in Virginia, Wisconsin and New Jersey who shoulder higher non-payroll costs during the coronavirus crisis—such as high rent or utilities payments—say the restrictions put greater stress on their operations, the legislators said. The SBA rules stifle their ability to adapt PPP loans to best suit the challenges faced by their businesses, they said.

“Many small businesses are concerned that, due to the extenuating factors surrounding the pandemic, employees that have been let go will not want to immediately return to their employment,” the 10 House signatories wrote Treasury Secretary Steven Mnuchin and SBA Administrator Jovita Carranza. “According to current PPP guidance, this would negatively affect a borrower’s loan forgiveness, even though this is a factor outside of said borrower’s control.”

In addition, many small businesses that can’t rehire employees by June 30 could see the federal government cut the loan amount it would forgive during the national emergency, the lawmakers said.

“We ask that you share your agencies’ rationale for including this additional stipulation, and we ask that you rescind this requirement and allow small businesses the flexibility, within the parameters set forth by Congress, to use the PPP loans as necessary to keep their individual business afloat,” the House members wrote Mnuchin and the SBA chief.

“Forcing small business owners to make this choice could result in these businesses having to close their doors, further feeding into a loss of industry and higher unemployment at a time when Americans are struggling most,” the lawmakers wrote.

In addition to Spanberger, Gallagher and Gottheimer, the bipartisan letter to Mnuchin was signed by Reps. Paul Mitchell (R-MI-10), Kathleen Rice (D-NY-04), Brian Fitzpatrick (R-PA-01), Dean Phillips (D-MN-03), Jason Crow (D-CO-06), Elaine Luria (D-VA-02) and Gil Cisneros (D-CA-39).