The Hill - Icymi: Rep. Cisneros Op-Ed -- Big Banks Cannot Shut out Small Businesses from Paycheck Protection Program

Op-Ed

By: Rep. Gilbert R. Cisneros, Jr.

The $349 billion Paycheck Protection Program (PPP) ran out of money in 14 days. Unfortunately, too many small businesses were shut out of the program, while bigger businesses were prioritized. A lack of clear guidance and oversight led many big banks to process and approve PPP applications that favored their bottom line. During a time when we should be helping the most vulnerable, putting profits over people is completely unacceptable.

CNN reported on lawsuits against Bank of America, Wells Fargo, JPMorgan Chase, and US Bank alleging that America's biggest banks were reshuffling PPP applications and prioritizing those that would make them the most money in processing fees. An Associated Press investigation found that 94 publicly traded companies, some with market values of over $100 million, got $365 million in PPP loans, loans that were supposed to provide emergency relief to our small businesses. In 2008, big banks were bailed out when they needed help. Now, during our country's unprecedented crisis, big banks are abandoning those that need the most help.

According to the Small Business Administration (SBA), it processed more than 14 years' worth of loans in less than 14 days. It's a striking number that underscores the intense struggles our community is facing. It doesn't help when big banks are engaging in exclusionary practices that prevent small businesses from accessing emergency relief. They don't have the same type of resources or connections that bigger businesses do, especially businesses owned by people of color who traditionally face structural challenges within our banking system. Although the applications were supposed to be done on a first-come, first-served basis, big banks were prioritizing bigger businesses and wealthy clients.

Many small businesses have had to make impossible decisions because of this pandemic. Through no fault of their own, they've had to cut down staff, reduce payroll, or close permanently. The PPP was a lifeline for our small businesses created by Congress through the Coronavirus Aid, Relief, and. Economic Security (CARES) Act. However, many of our small businesses were left empty handed. While I've heard directly from small businesses owners in California's 39th District who've benefited from PPP, an overwhelming majority were not so lucky. Some never heard back from their bank, while others couldn't even access banks' PPP online portals. It shouldn't take blind luck for small businesses to get these forgivable loans.

Small businesses are at a severe disadvantage. So when we're seeing reports that big businesses are reaping millions of dollars in relief, while their smaller counterparts are denied requests for tens of thousands of dollars, it puts a spotlight on the actions of big banks.

In an effort to fix this process, Congress has enacted several provisions in the most recent coronavirus relief bill, the Paycheck Protection Program and Health Care Enhancement Act, to better support our small businesses. Included with the $310 billion going to the PPP, $30 billion is for medium-sized banks and credit unions, while $30 billion is reserved for community lenders, small banks, credit unions, and Community Development Financial Institutions. These banks ensure that our small businesses are being taken care of, including ones owned by people of color, women and veterans. We need a targeted approach, and this coronavirus relief bill is a step in that direction.

The administration also needs to step up and issue clear, concise guidance for all our banks. I joined my colleagues in sending a letter to Treasury Secretary Steven Mnuchin and SBA Administrator Jovita Carranza urging them to protect small businesses from exclusionary PPP application requirements. The coronavirus does not discriminate, and neither should the PPP.

While guidance from the administration is critical, I believe our big banks should also act in good faith. We need our banks to be good actors and prioritize the American people and small businesses over profits during this crisis. Small businesses employ nearly half of the United States workforce. When they're unable to pay their employees, families are out of work and unable to put food on the table or pay their bills. During this national crisis, everyone, including our big banks, needs to come together. Now that Congress has approved an additional $370 billion for PPP and Economic Injury Disaster Loans, we need to make sure this process runs smoothly and efficiently.

Small businesses owners want the PPP forgivable loans to keep their businesses afloat, keep their employees on their payroll, and pay for basic operating expenses. There is no official timeline of when things will go back to normal, but I know our small business owners are committed to the safety and health of the community. All they're asking for is a fair chance. Our banks, this administration, and Congress need to step up for them.

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