Longstanding Issues In PPP Remain In New SBA Rules

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Longstanding Issues In PPP Remain In New SBA Rules
<a href="https://pixabay.com/users/Engin_Akyurt/">Engin_Akyurt</a> / Pixabay

WASHINGTON, D.C.  Late yesterday evening, Trump’s Small Business Administration (SBA) released new guidance for the revamped Paycheck Protection Program (PPP). Unfortunately, this new iteration of the PPP continues to neglect longstanding issues concerning minority-owned businesses, fraud, and loopholes allowing loans going to Trump allies.

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Q3 2020 hedge fund letters, conferences and more

Issues In PPP Remain

“Last year, the Paycheck Protection Program — intended to be a lifeline for mom-and-pop businesses trying to keep the lights on and employees paid — was hijacked by big corporations and fraudsters looking to make a quick buck off the taxpayer’s back,” said Accountable.US President Kyle Herrig. “Lawmakers have more work ahead of them to ensure that this round of the PPP plugs its dangerous holes in transparency and actually gets relief funds into the hands of deserving small businesses.”

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Some key issues in the new rules that lawmakers must address include:
  • DEMOGRAPHIC INFO “OPTIONAL”: Despite the PPP’s endemic issues allowing businesses owned by people of color to be systematically left behind, the new SBA rules still allow the demographic section on loan applications to be “optional” — decreasing transparency around who the program is helping and who is being shut out.
  • LENDERS NOT LIABLE FOR FRAUD: Although the PPP has been plagued with rampant fraud, the Trump SBA clarified that program lenders “will be held harmless for borrowers’ failure to comply with program criteria,” limiting accountability for lenders and the PPP itself.
    • Additionally, the SBA explicitly stated that a lender does not need to independently verify” information borrowers submit when applying for loan forgiveness — potentially allowing for the same lack of front-end vetting that contributed to issues in the PPP's first rounds.
  • HIDDEN CONFLICTS OF INTEREST: Although businesses tied to the Trump administration got “millions” in PPP loans, the SBA clarified that officials only need to disclose conflicts of interest in existing loans if they apply for forgiveness — leaving room for the well-connected to continue cashing in on taxpayer dollars.

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