Reed Helps Score Big Win for RI Small Biz with New “EZ Form” to Help with PPP Compliance
After Senators call for streamlined loan forgiveness application process, SBA and Treasury cut paperwork down from complicated 11-page form to a simplified and more straight-forward 3-page document
WASHINGTON, DC – U.S. Senator Jack Reed scored a significant victory in the push to make it easier for Rhode Island small businesses to apply for federal loan forgiveness.
After requests from Senators Reed and his Democratic Senate colleagues, and in response to a recent law Senator Reed cosponsored and helped pass, the U.S. Treasury and U.S. Small Business Administration (SBA) announced a revised, borrower-friendly Paycheck Protection Program (PPP) loan forgiveness application.
The Paycheck Protection Program Flexibility Act (Public Law: 116-142), which Reed cosponsored, extended the PPP loan forgiveness period from 8 weeks to 24 weeks, giving small businesses more time to spend PPP money and still qualify for forgiveness. It also allows businesses and non-profits to spend more money on other business expenses, such as utilities and rent by altering the threshold that must be directed to employee wages from 75 percent to 60 percent.
After initially releasing an 11-page form that the SBA estimated would take three hours to complete and required multiple calculations, today, Treasury and SBA released a new three-page “EZ” loan forgiveness form that certain PPP recipients may use.
“Removing some of this overly cumbersome paperwork should be a real help for many Main Street businesses. I’m pleased we were able to cut down on needless red tape and reduce the cost-burden on compliance. This new application form is simpler, more efficient, and will help ensure eligible small businesses receive the loan forgiveness they qualify for,” said Senator Reed. “While this is one positive step, I will continue pushing for further reform and oversight of this program, as well as additional steps to get our economy working properly.”
In a June 12 letter signed by all 47 Democratic U.S. Senators they noted: “Since the release of the forgiveness form and instructions a few weeks ago, we have heard significant concerns from small businesses and lenders alike about the complexity of the process, especially for the smallest businesses. The 11-page form that must be completed to secure forgiveness is especially burdensome, time-consuming, and costly for very small and underserved businesses, including microbusinesses, sole proprietorships, rural, and minority-owned small businesses. We are especially concerned that so many of these very small and underserved businesses will feel compelled to hire accountants and attorneys to complete the forgiveness form in a manner that provides comfort that the loans will be forgiven. This is not just an issue for existing borrowers. It contributes to already existing barriers to entry for new borrowers. For example, recent survey data indicated that close to a fifth of minority business owners did not even try to apply for assistance from programs like PPP that they could have greatly benefited from because they saw the application process to be too difficult and long. The lengthy and complicated forgiveness form only adds to the already significant hurdles for inclusion of all small businesses in the program.”
PPP was launched on April 3 and has since disbursed about $520 billion for struggling businesses, according to SBA.
After pledging transparency, the Trump Administration has reversed its commitment and is now refusing to disclose names of PPP loan recipients, despite the fact that the loans are taxpayer-funded public subsidies. Additionally, some billion-dollar companies such as the Los Angeles Lakers have obtained PPP assistance, suggesting that a significant portion of the funding has not been allocated as it was intended and stronger oversight and public scrutiny is required to ensure taxpayer funds are not misused. Senator Reed is continuing to press for this accountability.
The PPP’s application period for those seeking loans ends June 30th.