Tipton, Perlmutter Spearhead Key PPP Rule Change to Keep Loan Forgiveness Eligibility for Small Businesses

Statement

This week, the U.S. Department of Treasury and the Small Business Administration (SBA) issued an Interim Final Rule yesterday that updated guidance for disbursement of Paycheck Protection Program (PPP) loans to afford maximum leniency to financial institutions in disbursing PPP loan funds to ensure that the loans could be forgiven. Congressmen Scott Tipton (CO-03) and Ed Perlmutter (CO-07) had earlier identified the necessity for guidance such as this, and took swift action to see it implemented.

"The PPP has been effective at keeping employees paid during this time of uncertainty. We anticipated there would need to be changes to meet the specific needs of the financial institutions within our Colorado communities. As smaller financial institutions are the only means for many small businesses in rural areas to receive federal assistance through the PPP, it was critical for the Administration to amend its guidance and ensure that loan forgiveness was not taken away through no fault of the business owner," said Tipton. "I applaud the employees of the smaller banks and credit unions across the district who have worked tirelessly to keep Main Street afloat, and I will keep working to ensure they have the means to best serve their clients."

"I'm pleased to see the Treasury Department and SBA work together to update their guidelines to ensure financial institutions with greater flexibility as they disburse PPP loans and provide support for our small businesses as quickly as possible," said Perlmutter.

On April 10, Tipton and Perlmutter led a letter to Treasury and the SBA (SBA) asking for leniency in the time frame that banks have to disburse funds for loans made under the Paycheck Protection Program (PPP) to qualify for 100% loan forgiveness. The Representatives had heard concerns from financial institutions in Colorado communities that the compliance burden placed on these institutions in standing up the PPP could jeopardize the forgiveness eligibilty for their approved PPP loans because the prescribed disbursement timeframe was hard to meet.
In part, the letter reads:

"To protect the guarantee laid forth by Congress in the Coronavirus Aid, Relief, and Economic Security (CARES) Act, we encourage the Treasury Department and the SBA to update the PPP Frequently Asked Questions (FAQs) to provide financial institutions flexibility in disbursing funds for PPP loans approved before the 10-day requirement was finalized. Providing this flexibility will help lending and compliance departments fulfill the needs of their already approved PPP borrowers while preserving access to PPP applications for businesses in their community who may still apply. It will also preserve the intent of the CARES Act to expeditiously distribute money to small businesses quickly and preserve eligibility for loan forgiveness for certain expenses by the small businesses."

Source