ICYMI: Spanberger Leads Bipartisan Effort Pressing House Leadership to Cut Red Tape for Small Businesses, Fix Flexibility Issues with the Paycheck Protection Program

In a Letter Sent to Speaker Pelosi and Minority Leader McCarthy, Spanberger & 11 of Her Colleagues Called for Both Parties to Address Burdensome Restrictions on Small Businesses Seeking Loan Forgiveness through the SBA’s Paycheck Protection Program

HENRICO, V.A. – As the negotiation of the next COVID-19-related legislative package continues, U.S. Representative Abigail Spanberger yesterday led a bipartisan effort urging House leadership to improve flexibility and cut red tape for American small businesses seeking federal assistance through the U.S. Small Business Administration’s (SBA’s) Paycheck Protection Program (PPP).  

Just prior to the rollout of PPP earlier this month, the SBA introduced guidance that severely restricted non-payroll loan forgiveness for U.S. small businesses applying for PPP loans. This guidance requires businesses to spend 75 percent of the PPP loan on maintaining payroll in order to receive loan forgiveness—a stipulation not included by Congress in the Coronavirus, Aid, Relief and Economic Security (CARES) Act. These restrictions can place greater stress on businesses with higher non-payroll costs to cover during the coronavirus crisis—such as high rent or utilities payments—and hamstring business owners’ ability to adapt the loans to the unique challenges faced by their individual businesses.

In a letter sent to Speaker of the House Nancy Pelosi (D-CA-12) and House Minority Leader Kevin McCarthy (R-CA-23), Spanberger urged Pelosi and McCarthy to push for the elimination of this restrictive requirement in the next iteration of COVID-19-related emergency legislation. Her letter was co-led by U.S. Representatives Brian Fitzpatrick (R-PA-01) and Josh Gottheimer (D-NJ-05).

“As Congress continues our negotiations to craft another legislative package to respond to the impacts of the COVID-19 pandemic, we must include language clarifying the loan forgiveness provisions of the Paycheck Protection Program (PPP),” said Spanberger and her colleagues. “Specifically, Congress must take action to ease burdensome requirements on loan forgiveness set by the Department of the Treasury and the Small Business Administration (SBA), particularly the requirement that 75 percent of the loan be spent on payroll costs. Additionally, we must address the negative implications for a borrower’s loan forgiveness that arise if a small business tries but is unable to rehire employees due to the economic and public health uncertainty surrounding the current crisis.9

Additionally, according to current PPP guidance, many small businesses unable to rehire employees by June 30, 2020 could see reductions in their federal loan forgiveness percentage. These additional stipulations could mean the difference between a business successfully reopening or permanently closing its doors, which flies in the face of Congress’ intention in creating this program through the CARES Act. In their letter, the bipartisan group of lawmakers called for clarified guidance on these regulations.

“Congress must ensure that any future COVID-19 relief legislation provides guidance for borrowers that try but are unable to rehire employees by June 30, 2020,” the letter states. “Many small businesses are concerned that, due to the extenuating factors surrounding the pandemic – including ongoing state and local stay-at-home orders – they may not be able to meet the June 30 deadline. According to current PPP guidance, this would negatively affect a borrower’s loan forgiveness, even though this is a factor outside of the borrower’s control. These small businesses require direction on how to navigate this aspect of the PPP loans, without sacrificing their loan forgiveness.”

Yesterday, Spanberger also called on Members of Congress to support additional funding for PPP after the SBA closed applications due to a lapse of available federal funding.

The bipartisan letter sent yesterday was also signed by U.S. Representatives Dean Phillips (D-MN-03), Anthony Gonzalez (R-OH-16), Max Rose (D-NY-11), Kendra S. Horn (D-OK-05), Jaime Herrera Beutler (R-WA-03), Elissa Slotkin (D-MI-08), Vicente Gonzalez (D-TX-15), Darren Soto (D-FL-09), and Xochitl Torres Small (D-NM-02). Click here to read the letter.


Since the launch of the PPP program earlier this month, Spanberger has continued to press for changes to the PPP’s 75 percent rule. Last week, Spanberger sent a bipartisan letter to Treasury Secretary Steven Mnuchin and SBA Administrator Jovita Carranza urging the administration to rescind this burdensome requirement related to non-payroll costs.

Following the opening of the PPP application, Spanberger urged the SBA and participating lenders to make sure these funds are delivered to Central Virginia businesses, sole-proprietorships, and self-employed individuals in the most efficient and expedient way. Spanberger also sent a letter to Mnuchin and Carranza expressing her concerns about the PPP’s shaky rollout and its consequences for small businesses needing financial assistance during the coronavirus pandemic. Additionally, she called on the administration to provide additional guidance to PPP lenders that would clarify eligibility requirements and encourage lenders to provide PPP loans to all eligible businesses.

And earlier this month, Spanberger hosted an interactive telephone town hall with representatives from the U.S. Small Business Administration (SBA), the U.S. House Appropriations Committee, and the Office of the Governor of Virginia. During the event, Spanberger and her guests answered questions directly from Central Virginians about the immediate economic impacts of COVID-19 on Central Virginia workers and small businesses, as well as the resources available to them.

More than 3,400 Central Virginians tuned in to participate in Spanberger’s small business-focused telephone town hall. Click here to listen to a full audio recording of the event.


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