Blog: Lawmakers advocate Paycheck Protection Program reform – Financial Regulation News – Financial Regulation News

A trio of lawmakers in the U.S. House of Representatives have joined 37 colleagues in advocating for Paycheck Protection Program (PPP) reform initiatives.

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Reps. Chrissy Houlahan (D-PA), Judy Chu (D-CA) and Nydia M. Velazquez (D-NY) spearheaded correspondence to Small Business Administration (SBA) Administrator Isabella Casillas Guzman, saying that more than 300,000 PPP borrowers are facing financial hardship due to good faith loan amount miscalculations in some instances due to no fault of their own.

The SBA defines an excess loan amount error as a borrower or lender error made in good faith that caused a borrower to receive a PPP loan amount exceeding the borrower’s correct maximum loan amount under the CARES Act and the Economic Aid Act.

According to the lawmakers, SBA guidelines maintain the loan amounts are not eligible for loan forgiveness and must be repaid, even if the funds were spent on forgivable uses during the covered period, regardless of whether the borrower or the lender caused the error.

“The constant and rapidly changing nature of PPP rules combined with numerous other factors created circumstances making it inevitable that the smallest businesses, which are the least likely to have access to attorneys or accountants, would make good faith loan amount miscalculations,” the legislators wrote.

Velazquez, Small Business Committee chairwoman, said small businesses that turned to PPP for relief during a once in a lifetime crisis, did so believing that their loans would be fully forgiven if used properly.

“Penalizing borrowers for making good-faith loan calculation errors would hurt vulnerable small businesses at a time when they can least afford it,” Velázquez said. “It’s vital that SBA take action and work with Congress to resolve this situation and ensure that small businesses hurt by the pandemic aren’t stuck with an unexpected bill.”

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