U.S. Sen. Sherrod Brown (D-OH) – ranking member of the U.S. Senate Committee on Banking, Housing, and Urban Affairs – and Banking Committee members Sen. Bob Menendez (D-NJ) and Sen. Tina Smith (D-MN) today sent a letter to Treasury Secretary Steven Mnuchin and Small Business Administration (SBA) Administrator Jovita Carranza urging them to provide answers and clarity to small businesses regarding Paycheck Protection Program (PPP) loan amounts. The Senators cited recent press reports where small businesses that successfully navigated the PPP process were surprised to find that they received less funding than they applied for or expected. The Senators called for the Administration to investigate the claims and address their questions immediately to ensure that all small businesses have access to full funding of PPP loans.
“PPP loans are an important resource in these difficult times. Small businesses need all the help they can get, and we’ve already seen how lenders favored larger, wealthier clients over small businesses. Answers to these questions will help ensure that eligible small businesses are not further disadvantaged by lenders shorting them on PPP loans,” wrote the Senators.
A copy of the letter appears here and below:
The Honorable Steven T. Mnuchin The Honorable Jovita Carranza
U.S. Department of the Treasury U.S. Small Business Administration
Dear Secretary Mnuchin and Administrator Carranza:
This week The New York Times reported that some lenders, without explanation, reduced the amount of funding small businesses received through Paycheck Protection Program (PPP) loans to less than what those businesses were eligible to receive under the program.
Small businesses are doing everything they can to withstand the economic impact of this pandemic and their difficulties accessing PPP loans are well documented. But as The New York Times article noted, even small businesses that successfully navigated the PPP process were surprised to find that they received less funding than they applied for or expected.  In one example, a Small Business Administration employee confirmed that the reduction came from the lender, not the SBA. When pressed about the discrepancy, the lender then provided the full requested amount. Whether inadvertent or intentional, this troubling report warrants a response from your agencies.
To help small businesses better understand how your agencies will ensure their access to full funding under the Paycheck Protection Program, please answer the following questions:
- How are you monitoring PPP lending to identify and evaluate instances in which borrowers receive less funding than they request and are eligible for under the program?
- What protections exist so that a business that received a reduced loan amount, through no fault of its own, can obtain its requested PPP loan amount?
- What are your agencies doing to investigate discrepancies between the amount of funding borrowers request and the amount of funding lenders provide to those borrowers?
- How will your agencies hold accountable lenders that reduce loan amounts to less than a business’s request and entitlement?
- What resources from your agencies are available to small businesses looking for recourse against lenders that reduce PPP loan amounts?
PPP loans are an important resource in these difficult times. Small businesses need all the help they can get, and we’ve already seen how lenders favored larger, wealthier clients over small businesses. Answers to these questions will help ensure that eligible small businesses are not further disadvantaged by lenders shorting them on PPP loans.