Thanks to a bipartisan bill introduced in the U.S. Senate last week, Arizona’s smallest companies that receive loans through the federal Paycheck Protection Program (PPP) could see paperwork requirements simplified to make it easier to access funds needed to keep their businesses operational.
Arizona U.S. Senator Kyrsten Sinema, a Democrat, and North Dakota Senator Kevin Cramer, a Republican, introduced the bill in the Senate Banking Committee.
Called the Paycheck Protection Small Business Forgiveness Act, it would make loans that are no greater than $150,000 fully forgivable by filling out a one-page form.
“Fully forgiving Arizona small businesses’ PPP loans provides needed economic certainty to local employers, which have suffered losses through no fault of their own, while protecting Arizonans’ jobs and paychecks,” Sinema said in introducing the legislation.
The loans would be forgiven in full as long as the borrower submits a one-page form that attests that the recipient complied with the requirements of the PPP program as described in the economic stimulus legislation passed earlier this year, known as the CARES Act.
Bill would relieve paperwork burden for 85 percent of loans
The co-sponsors of the bill including Bob Menendez, D-NJ, and Thom Tillis, R-NC, said the legislation would save small companies thousands of dollars and relieve their paperwork burdens.
It also would provide avenues for enforcement action against those engaged in fraud, and allow the U.S. Small Business Administration (SBA) to focus its compliance resources on higher value loans.
The approximately 3.7 million PPP loans of $150,000 or less account for 85 percent of all PPP approved loans but only 26 percent of the funds delivered, the co-sponsors said.
The cost of applying for forgiveness for a PPP loan of this size is $2,000 for the small business and $500 for the lender. The bipartisan legislation could save small businesses $7.4 billion and banks nearly $2 billion, they said.
National banking groups support the bill
The legislation is supported by state and national banking and agricultural groups including the Independent Community Bankers Association, Credit Union National Association and Farm Credit Council.
“The current forgiveness application is unnecessarily burdensome for many businesses, particularly the smallest of small businesses without the administrative support needed to complete the form. Small businesses and their employees are the backbone of our nation’s economy and communities,” said Consumer Bankers Association President and CEO Richard Hunt in a statement last week. “This bipartisan automatic forgiveness process will allow businesses to focus their time and resources on seeing customers and hiring employees instead of hiring consultants to fill out paperwork.”
Measures included in the Paycheck Protection Small Business Forgiveness Act:
-Provides forgiveness for PPP loans of $150,000 or less if the borrower submits a simple, one-page attestation form to the lender
-Ensures the lender will be held harmless from any enforcement action if the borrower’s attestation contained falsehoods
-Eligible recipients of the loans may only be subject to an enforcement action or penalty they commit fraud or expend loan proceeds on expenses that are not allowable the actTo read the fill text of the bill, go to: PPP Small Business Forgiveness Act.