WASHINGTON—A group of 40 Representatives signed a letter requesting the Small Business Administration (SBA) review the paycheck protection program (PPP) “Good Faith Error” rule.
The letter was led by House Small Business Committee Members Chrissy Houlahan (D-PA) and Judy Chu (D-CA), along with Committee Chairwoman Nydia M. Velázquez (D-NY).
The letter was sent to SBA Administrator Isabella Casillas Guzman
The rule states that any portion of PPP loans received because of “excess loan amount errors” must be repaid. However, the letter noted that PPP was established to provide fully guaranteed, forgivable loans to small businesses to meet payroll costs during the pandemic, NAFCU said.
In addition, the letter points to the rapidly changing nature of PPP rules combined with many other factors leading to how “the smallest businesses, which are the least likely to have access to attorneys or accountants, would make good faith loan amount miscalculations.” The SBA estimates there are 304,384 PPP loans with excess loan amount errors of $3.775 billion - an average excess loan amount of $12,403.
Statutory Change May be Needed
The letter asks the SBA whether the agency can make these “excess loan amount errors” forgivable, or if a statutory change is needed. It concluded by stating that making these excess loan amounts forgivable “would represent the federal government making good on its promise to America’s small businesses that they’d receive full PPP loan forgiveness if loans were spent on forgivable uses. This would allow us to bring much-needed fairness to the final stage of PPP and ensure an equitable economic recovery from the pandemic.”
“NAFCU thanks Representative Houlahan and the other signers of the letter for their leadership in urging the SBA to revisit the ‘Good Faith Error’ rule and their ability to provide relief,” said NAFCU President and CEO Dan Berger. “As America’s small businesses, and the small financial institutions like credit unions that support them, continue to recover from the pandemic, they deserve a fair opportunity for equitable economic recovery originally promised by the SBA under the paycheck protection program, and not punishment for unintended errors.”