PPAI has joined with more than 140 trade associations representing thousands of small businesses, banks, credit unions, financial institutions and employees in a letter to leadership in the House of Representatives and its Committee on Small Business to voice strong support for H.R. 7777, The Paycheck Protection Program Small Business Forgiveness Act, which provides automatic forgiveness for Paycheck Protection Program (PPP) loans under $150,000. Last month, PPAI pushed for the passage of similar legislation in the Senate.
The Paycheck Protection Program (PPP), established by Congress in the Coronavirus Aid, Relief, and Economic Security (CARES) Act, has provided millions of small businesses the economic relief they need to meet the challenges posed by the COVID-19 crisis. The bipartisan H.R. 7777 would ensure that small business owners can focus their time, energy and resources back into their businesses and communities instead of allocating significant time and resources into completing complex forgiveness forms.
The letter notes, “Given the dire economic data released this week and ongoing challenges facing small businesses, we urge the House to take up and pass this legislation without delay. This straightforward legislation would forgive all PPP loans of less than $150,000 upon the borrower’s completion of a simple, one-page forgiveness document. PPP loans of $150,000 and under account for 86 percent of total PPP recipients, but less than 27 percent of PPP loan dollars. Expediting the loan forgiveness process for many of these hard-hit businesses will save more than $7 billion dollars and hours of paperwork.”
Data provided in an independent analysis by AQN Strategies (AQN) has shown an estimated benefit of issuing auto-forgiveness for various loan size thresholds. AQN anticipates the combined resource requirements of operators’ time and/or third-party expenses to represent an effective cost of $2,000-$4,000 for each business that applies for forgiveness, requiring 20-100 hours of focused time from key leaders of these businesses. With an average loan size of less than $19,000 for the smallest 60 percent of loans, this estimate would represent 10-20 percent of the loan amount itself, which is otherwise intended to support payroll, rent and other obligations necessary to keep businesses alive and ready to restart. In addition, AQN’s analysis suggests that the cost to businesses and lenders would be lower than the cost for the government to auto-forgive loans.
