(Washington, D.C.)—Senate Committee on Small Business and Entrepreneurship Ranking Member Ben Cardin (D-Md.) today issued a statement after the Small Business Administration (SBA) Office of Inspector General (OIG) issued a report recommending that SBA issue guidance to prioritize underserved borrowers in the Paycheck Protection Program (PPP). The report also determined that “it is unlikely that SBA will be able to determine the loan volume to the intended prioritized markets,” because the agency did not request optional demographic data on initial PPP applications, and recommends that SBA request demographic information on the required forms for loan forgiveness for existing PPP borrowers, and revise the loan application for future PPP borrowers.
“The Inspector General’s report makes clear that SBA and the Treasury Department have not taken the steps necessary to ensure that underserved and underbanked small businesses have access to paycheck loans,” Ranking Member Cardin said. “I authored language in the CARES Act that called on the SBA to prioritize vulnerable small businesses. Not only did SBA fail to issue guidance to prioritize the paycheck loan applications of underserved and rural small businesses, the agency implemented a ‘first-come, first-served’ policy that made it harder for vulnerable small businesses to access PPP.
“SBA must immediately issue guidance to prioritize the loan applications of small businesses in underserved and rural communities and follow the IG’s recommendation to collect demographics data on applications moving forward.”
The IG’s recommendation that SBA collect demographics data on the PPP loan forgiveness form comes days after Senate Republicans blocked passage of legislation to increase transparency in the federal small business relief programs introduced by Cardin, Senate Democratic Leader Chuck Schumer (N.Y.), and Democratic Senators Jeanne Shaheen (N.H.) and Sherrod Brown (Ohio).
Last month, Cardin, Brown, and Schumer requested the report following press reports that some lenders participating in SBA’s Paycheck Protection Program (PPP) prioritized the applications of larger and wealthier clients to the detriment of smaller businesses adversely impacted by the COVID-19 pandemic.