HENRICO, V.A. – U.S. Representative Abigail Spanberger—Co-Chair of the Blue Dog Coalition’s Rural Opportunity Task Force—today led an effort calling on the administration to fix problems faced by community banks and credits unions related to the rollout of the Paycheck Protection Program (PPP).
In a letter sent to U.S. Treasury Secretary Steven Mnuchin and U.S. Small Business Administration (SBA) Administrator Jovita Carranza, Spanberger and fellow Members of the Blue Dog Coalition urged the administration to rectify existing challenges faced by smaller financial institutions—particularly those in rural and underserved areas—ahead of the next round of PPP funding. Specifically, they called on Secretary Mnuchin and Administrator Carranza to do the following: provide clear and concise instructions on how community banks and credit unions can access the SBA’s loan programs; make sure community banks, credit unions, and community development financial institutions (CDFIs) have equal opportunity to issue PPP loans; and direct the Federal Reserve to provide advances against PPP loans.
“If these smaller institutions are not able to help their communities, we fear the PPP will fail to achieve the goal of keeping small businesses afloat, and instead, leave small businesses and farmers in rural and underserved communities without access to necessary capital to survive,” said Spanberger and her colleagues. “This is everyone’s worst nightmare about government—it doesn’t work when you need it the most. The new round of PPP funding will present an opportunity for the administration to improve the program.”
Last week, Spanberger called on Members of Congress to support additional funding for PPP after the SBA closed applications due to a lapse of available federal funding.
Spanberger co-led the letter alongside U.S. Representative Xochitl Torres Small (D-NM-02), Co-Chair of the Rural Opportunity Task Force.
The letter was also signed by U.S. Representatives Stephanie Murphy (D-FL-07), Tom O’Halleran (D-AZ-01), Lou Correa (D-CA-46), Anthony Brindisi (D-NY-22), Kurt Schrader (D-OR-05), Sanford Bishop (D-GA-02), Jim Cooper (D-TN-05), Jim Costa (D-CA-16), Henry Cuellar (D-TX-28), Jared Golden (D-ME-02), Vicente Gonzalez (D-TX-15), Daniel Lipinski (D-IL-03), Ben McAdams (D-UT-04), Brad Schneider (D-IL-10), Mikie Sherrill (D-NJ-11), and Max Rose (D-NY-11).
Click here to read the letter, and see below for the full text.
Dear Secretary Mnuchin and Administrator Carranza,
As we continue to urge House and Senate Leadership to reach a bipartisan deal to deliver additional funding for the Paycheck Protection Program (PPP), we are writing to express our concern regarding the ability of community-based financial institutions to access the program in the first place. We have been hearing concerns directly from small community banks, credit unions, and community development financial institutions (CDFIs) in our districts that these financial institutions may have been getting shut out of the PPP altogether.
Community banks, credit unions, and CDFIs are the backbone of support for small businesses and farmers, and they are integral to the livelihoods of neighborhoods and communities across the country, particularly in rural communities. According to the Independent Community Bankers of America (ICBA), community banks alone provide more than 60 percent of small business loans.
These community-based financial institutions have not only faced confusion on loan and participation requirements, but many were not able to access to the E-Tran and Lender Gateway Systems. If these smaller institutions are not able to help their communities, we fear the PPP will fail to achieve the goal of keeping small businesses afloat, and instead, leave small businesses and farmers in rural and underserved communities without access to necessary capital to survive. This is everyone’s worst nightmare about government—it doesn’t work when you need it the most.
The new round of PPP funding will present an opportunity for the administration to improve the program. In order to deliver quicker results to support community banks, credit unions, and CDFIs, we propose the following actions once the funding is replenished:
1. The Small Business Administration (SBA) must provide clear and concise instructions to institutions on how they can access SBA loan programs. This is especially necessary for new SBA lenders who have had trouble accessing the system to process the loans they already have available. Due to technical difficulties and lack of clear instructions, small community-based lenders have been locked out of the PPP system altogether or find themselves spending precious time navigating the technological problems. SBA should provide a user manual for the PPP’s platform, and they should immediately fix the technical issues and invest in reliable technology going forward.
2. The U.S. Department of the Treasury and SBA must ensure community banks, credit unions, and CDFIs have equal opportunity to issue PPP loans. Many small businesses and farmers rely on these financial institutions for their banking needs, especially in rural and underserved areas. Treasury and SBA should ensure PPP access for community banks, credit unions, and CDFIs, including by establishing a set-aside for institutions under $50 billion in assets, to enable all small businesses an opportunity to access this important program provided by Congress.
3. In addition to the Federal Reserve’s creation of a program to backstop small business loans, the Fed should also provide advances against PPP loans. This will help to ensure that financial institutions making PPP loans maintain their liquidity and are able to make more loans.
We respectfully ask that, once Congress replenishes PPP funding, you address the needs of community-based financial institutions as soon as possible. Should the executive branch need additional funds or authorization to take any of these steps, Congress should stand ready to assist. Small business owners are counting on the federal government to get this right.
Following the rollout of the PPP earlier this month, Spanberger has worked to fix issues with the program and deliver immediate relief to Central Virginia small businesses and their employees. In a bipartisan letter sent to Speaker of the House Nancy Pelosi (D-CA-12) and House Minority Leader Kevin McCarthy (R-CA-23) last week, Spanberger urged Pelosi and McCarthy to push for the elimination of restrictive loan forgiveness requirements in the next iteration of COVID-19-related emergency legislation.
Spanberger has continued to press for changes to the PPP’s 75 percent rule. Earlier this month, Spanberger sent a bipartisan letter to Secretary Mnuchin and Administrator Carranza urging the administration to rescind this burdensome requirement related to non-payroll costs.
And 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. She also sent a letter to Secretary Mnuchin and Administrator 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.
Ahead of the rollout of the PPP, Spanberger hosted an interactive telephone town hall with representatives from the SBA, the U.S. House Appropriations Committee, and the Office of the Governor of Virginia. 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.