Democrats sought recommendations to further simplify loan forgiveness for Paycheck Protection Program borrowers, while Republicans expressed concern over program-related fraud during a House committee hearing on the PPP.
Small Business Committee Chairwoman Nydia Velázquez, D-NY., described loan forgiveness as potentially "the most important part of the program" during the Sept. 1 hearing.
In an effort to expedite PPP forgiveness, the U.S. Small Business Administration in July instituted a direct borrower forgiveness process, which included a direct forgiveness portal, for borrowers with loans of $150,000 or less. In order to be eligible, lenders for those small-dollar borrowers have to opt in.
Ranking Member Blaine Luetkemeyer, R-Mo., said during the hearing that lenders have received messages from the SBA about potential "enhanced lender audits" based on their participation in direct forgiveness. Some lenders have "legitimate and prudent reasons" for deciding against joining the SBA's direct forgiveness portal, such as having had their own systems running for months, Luetkemeyer added.
In addition, Luetkemeyer expressed concern about potential fraud, abuse and "granting blanket forgiveness" under the direct forgiveness process.
Patrick Kelley, SBA associate administrator for the Office of Capital Access, told S&P Global Market Intelligence in a statement that the agency will not audit lenders that opt out of the process.
"We will not require any lender to participate in Direct Forgiveness ... but we will expect every lender to do their part to provide timely forgiveness for America's small businesses," Kelley said.
Meanwhile, during their testimonies, Tracy Ward, director of the SBA 504 Loan Program at Self-Help Ventures Fund, and Marla Bilonick, president and CEO of the National Association for Latino Community Asset Builders, both recommended expanding the direct forgiveness process to include loans up to $350,000.
"I think expanding that up to [$350,000] poses minimal additional risk to program funds," Ward said. "Those loans are still reviewable, but it lessens the burden of submitting documentation, makes it more efficient."
Bilonick also called for resources for organizations helping small businesses use the portal for forgiveness applications.
"The community-based lenders and the mission-based lenders have opted into the portal because unlike higher-resourced financial institutions, the portal that the SBA is providing is actually an improvement," Bilonick added. "It is more straightforward."
