“These businesses have been neglected for almost a year,” Nydia Velázquez (DN.Y.), president of the Chamber of Small Businesses, told POLITICO. “I have pledged to work with the Biden administration to spread these benefits to as many of these individual owners as possible, not just those who are submitting new orders.”
According to data from the House Small Business Committee, more than 2.6 million individual, self-employed and self-employed owners have already been approved for PPP loans.
The reaction is the latest in a series of controversies over how the SBA is handling the program, which since its launch last April has distributed more than $ 662 billion in loans that can be forgiven if companies maintain their payroll. SBA, a small federal agency that manages the PPP together with the Department of the Treasury, has faced criticism for its obscure decision-making and the ever-changing rules that govern unprecedented economic life.
“I’m in a black hole because it looks like they are definitely going to forget people who have already signed up,” said Jonathan Kolbe, a New Jersey-based freelance photographer who has received two PPP loans and will not be able to increase them under the new rules. “I am disappointed with the SBA that they are not investigating this, to help people who have already complied with the rules, signed the applications and been approved.”
Concerns about the treatment of individual owners, independent contractors and self-employed companies – small employers, including housekeeping and repair services – have been pursuing PPP since the program began. While other companies were able to calculate their eligibility for PPP loans based on payroll costs, smaller companies were forced to apply for loans based on their net profits, which deduct items such as rent and utilities.
A survey of members of the National Association of Self-Employed Workers in December and January revealed that 68% believed that the federal government did not provide adequate financial support to the small business community through the PPP. A separate survey released last month by the advocacy group Small Business Majority found that more than one in three companies that applied for loans did not receive the full amount requested, including nearly all of the self-employed black entrepreneurs surveyed.
Last week, the Biden administration announced that it would revise the rules for individual and self-employed owners after discovering that these business owners have been “structurally excluded” and have undergone changes, although they make up the majority of all businesses. According to the new rules released by the SBA on Wednesday, companies will be able to calculate loan values based on a broader measure – gross revenue, which would make it easier for them to qualify.
Although at first it seemed like a comprehensive political benefit, the SBA will limit its potential impact by not allowing companies to modify their existing PPP loans if they have already been approved for aid. It is a break from the recent precedent. The SBA allowed farmers and ranchers to increase previous PPP loans after Congress passed a law in December that allowed them to qualify for more financing.
The SBA argues that it lacks retroactive regulatory authority that would allow it to increase previous PPP loans. SBA spokesman Matthew Coleman said that Congress in December gave him the authority to retroactively revise the rules for farmers and ranchers.
Although the small businesses involved do not have an army of lobbyists, their advocates are beginning to react.
“Diligent people should not be punished,” said Keith Hall, president and CEO of the National Association for the Self-Employed.
Some on Capitol Hill believe that the SBA has the power to adjust loans. Lawmakers are planning to delve into the reasons behind the decision and whether legislation is needed to address it.
Senate Small Business President Ben Cardin (D-Md.), Who plans to hold a PPP oversight hearing this month, said “it is a matter of justice”.
“I am very interested in finding ways to offer the same benefits to those who have already placed their orders,” he said. “I need to understand a little more fully the administrative challenges that the SBA faced and why they did not recommend doing this administratively.”
If the SBA follows the policy and it is Congress’s responsibility to intervene, borrowers will face a tight schedule. PPP loans are expected to expire on March 31. So far, neither the White House nor the main Democrats are making a big effort to extend them.
Dennis Ammann, CEO of Peoples Bank in Mississippi, said that “it appears that small businesses that need help most are being penalized.”
“I am so frustrated with the SBA if they follow this policy in advance,” said Ammann. “I don’t understand why the SBA doesn’t allow creditors to help these small businesses. It just doesn’t make sense.”