(Washington, D.C.)—Senate Committee on Small Business & Entrepreneurship Ranking Member Ben Cardin (D-Md.) and U.S. Senator Ron Wyden (D-Ore.), Ranking Member of the Senate Committee on Finance, called on the Small Business Administration (SBA) to resolve uncertainty regarding employee stock ownership plans (ESOPs) and make clear to banks and other lenders that ESOP-owned small businesses qualify for the new Paycheck Protection Program (PPP).
The senators' letter to SBA Administrator Jovita Carranza follows reports of eligible ESOP-owned small businesses being turned away by banks and lenders due to unclear SBA guidance on eligibility – despite Congressional intent to include these small businesses in federal relief.
“ESOP-owned businesses, like other small businesses, are in desperate need for federal assistance during this unprecedented time. Although not specifically enumerated in the PPP, it was Congress’s intent to include them in receiving the resources to help,” the senators wrote. “Accordingly, we respectfully urge the Small Business Administration to promptly take all appropriate actions to resolve the current uncertainty and publicly provide clarity on ESOP-owned small business eligibility for the PPP, in line with the intent of the law.”
The recently-issued SBA guidance on PPP stipulates that ESOP-owned small businesses are eligible for the program. Some lenders are reporting confusion, however, because it also references standing SBA guidance unrelated to the PPP that preclude loans to ESOPs themselves, rather than to ESOP-owned business.
A copy of Wyden and Cardin's letter asking for public clarity on the issue can be found here.