[House Hearing, 116 Congress]
[From the U.S. Government Publishing Office]
A REVIEW OF PPP FORGIVENESS
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HEARING
BEFORE THE
SUBCOMMITTEE ON ECONOMIC GROWTH, TAX, AND CAPITAL ACCESS
OF THE
COMMITTEE ON SMALL BUSINESS
UNITED STATES
HOUSE OF REPRESENTATIVES
ONE HUNDRED SIXTEENTH CONGRESS
SECOND SESSION
__________
HEARING HELD
SEPTEMBER 25, 2020
__________
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
Small Business Committee Document Number 116-095
Available via the GPO Website: www.govinfo.gov
__________
U.S. GOVERNMENT PUBLISHING OFFICE
41-469 PDF WASHINGTON : 2021
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HOUSE COMMITTEE ON SMALL BUSINESS
NYDIA VELAZQUEZ, New York, Chairwoman
ABBY FINKENAUER, Iowa
JARED GOLDEN, Maine
ANDY KIM, New Jersey
JASON CROW, Colorado
SHARICE DAVIDS, Kansas
KWEISI MFUME, Maryland
JUDY CHU, California
DWIGHT EVANS, Pennsylvania
BRAD SCHNEIDER, Illinois
ADRIANO ESPAILLAT, New York
ANTONIO DELGADO, New York
CHRISSY HOULAHAN, Pennsylvania
ANGIE CRAIG, Minnesota
STEVE CHABOT, Ohio, Ranking Member
AUMUA AMATA COLEMAN RADEWAGEN, American Samoa, Vice Ranking Member
TROY BALDERSON, Ohio
KEVIN HERN, Oklahoma
JIM HAGEDORN, Minnesota
PETE STAUBER, Minnesota
TIM BURCHETT, Tennessee
ROSS SPANO, Florida
JOHN JOYCE, Pennsylvania
DAN BISHOP, North Carolina
Melissa Jung, Majority Staff Director
Justin Pelletier, Majority Deputy Staff Director and Chief Counsel
Kevin Fitzpatrick, Staff Director
C O N T E N T S
OPENING STATEMENTS
Page
Hon. Andy Kim.................................................... 1
Hon. Kevin Hern.................................................. 3
WITNESSES
Ms. Lynn G. Ozer, President, SBA Lending, Fulton Bank, Pottstown,
PA............................................................. 5
Ms. Amy Bonfig, Owner, Little Saints Academy, St. Joseph, MN..... 7
Mr. Jim Parker, CEO & Director, Riverview Studios, Bordentown, NJ 8
Mr. Pete Patel, President & Chief Executive Officer, Promise
Hotels, Tulsa, OK.............................................. 10
APPENDIX
Prepared Statements:
Ms. Lynn G. Ozer, President, SBA Lending, Fulton Bank,
Pottstown, PA.............................................. 22
Ms. Amy Bonfig, Owner, Little Saints Academy, St. Joseph, MN. 37
Mr. Jim Parker, CEO & Director, Riverview Studios,
Bordentown, NJ............................................. 41
Mr. Pete Patel, President & Chief Executive Officer, Promise
Hotels, Tulsa, OK.......................................... 45
Questions and Answers for the Record:
Questions from Hon. Sharice Davids to Ms. Lynn G. Ozer and
Responses from Ms. Lynn G. Ozer............................ 48
Questions from Hon. Sharice Davids to Ms. Amy Bonfig and
Responses from Ms. Amy Bonfig.............................. 50
Additional Material for the Record:
HOPE Testimony............................................... 52
ICBA - Independent Community Bankers of America.............. 55
NAFCU - National Association of Federally-Insured Credit
Unions..................................................... 58
A REVIEW OF PPP FORGIVENESS
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FRIDAY, SEPTEMBER 25, 2020
House of Representatives,
Committee on Small Business,
Subcommittee on Economic Growth,
Tax, and Capital Access,
Washington, DC.
The Subcommittee met, pursuant to call, at 9:30 a.m., Room
2360, Rayburn House Office Building. Hon. Andy Kim [chairman of
the Committee] presiding.
Present: Representatives Kim, Davids, Schneider, Delgado,
Hern, Stauber, and Spano.
Chairman KIM. Good morning. I call this hearing to order.
I want to thank everyone for joining us this afternoon for
this official hybrid hearing. I want to make sure to note some
important requirements.
Let me begin by saying that the standing House and
Committee rules and practice will continue to apply during
hybrid proceedings. All members are reminded that they are
expected to adhere to these standing rules, including decorum.
During the cover period as designated by the speaker, the
Committee will operate in accordance with H. Res. 965 and the
subsequent guidance from the Rules Committee in a manner that
respects the rights of all members to participate. House
regulations require members to be visible through a video
connection throughout the proceeding, so please keep your
cameras on.
Also, please remember to remain muted until you are
recognized to minimize background noise. If you have to
participate in another proceeding, please exit this one and log
back in later.
In the event a member encounters technical issues that
prevent them from being recognized for their questioning, I
will move to the next available member of the same party and I
will recognize that member at the next appropriate time slot
provided they have returned to the proceeding.
For those members physically present in the Committee room
today, we will also be following the health and safety
guidelines issued by the attending physician. That includes
social distancing and especially the use of masks. I urge
members and staff to wear masks at all times while in the
hearing room, and I thank you in advance for your commitment to
a safe environment for all here today.
We are meeting today to conduct an important hearing on the
Small Business Administration's Paycheck Protection Program
(PPP), and specifically, a review of the loan forgiveness
process.
I want to thank each of the witnesses for their testimonies
today. Over the past several months, this Committee has held
numerous hearings on the PPP, and we have heard from borrowers
and lenders about the challenges they have faced in accessing
the program. I have also traveled across my district of
Burlington and Ocean Counties in New Jersey to speak with
business owners about how they fared through the pandemic, and
I have heard some of the successes and challenges they face
with the PPP and uncertainty about what the future holds.
From borrowers who eventually did get access to loans, the
Committee heard concerns about complicated, unclear, and
sometimes conflicting program rules and other requirements
associated with loan forgiveness.
Lenders also expressed a great deal of frustration over the
needlessly complicated rules and reported feeling unable to
adequately help their borrowers through the forgiveness
process. Through it all, borrowers simply wanted to ensure they
were using loan proceeds consistent with the law so that they
could qualify for full loan forgiveness and effectively convert
the loan into a grant which was the congressional intent in the
CARES Act.
Loan forgiveness is a centerpiece of the Paycheck
Protection Program, especially since the expectation by many
borrowers and lenders was that the loans would be fully
forgiven. Less than full forgiveness for a large body of loans
could have serious unintended negative consequences for
borrowers and lenders who have developed business plans around
full loan forgiveness.
As early as June, SBA and Treasury recognized how
challenging the initial loan forgiveness application was and
released an EZ application form. Unfortunately, borrowers and
lenders alike have reported no material differences between the
forms and calls for a streamlined application form for small
dollar PPP borrowers have increased.
In the meantime, lenders have remained limited in their
ability to provide guidance to the borrowers leading to great
anxiety and helplessness among borrowers who just want to do
things the right way and need clear and simple rules from SBA
and Treasury in order to do so.
And finally, we have some data to corroborate what the
lending community has been reporting anecdotally. This week,
the Government Accountability Office (GAO) published a new
report showing that as of September 8th, SBA had only received
about 56,000 forgiveness decisions from lenders, representing
just over 1 percent of the over 5.2 million PPP loans
outstanding.
This figure substantiates what the lending community has
been reporting anecdotally.
First, borrowers are struggling to simply understand the
terms and data needed to accurately complete the form, and
second, lenders are limited in their ability to provide
technical assistance to borrowers completing the forms because
of the insufficient guidance.
So as we enter the forgiveness period, it is timely to
conduct this hearing dedicated specifically to loan forgiveness
so that our Subcommittee can assess the issues faced by
borrowers and lenders and weigh proposals to provide relief for
borrowers who need it.
I look forward to the discussion today and thank each of
you again for taking the time to testify before us.
I now yield to the Ranking Member, Mr. Hern, for his
opening statement.
Mr. HERN. Thank you, Mr. Chairman. And thank you for
holding this very important and timely hearing.
Small businesses across this Nation, from my state of
Oklahoma to the Chairman's district in New Jersey, have been
disproportionately devastated by COVID-19.
When it reached our country, Congress acted fast. Numerous
programs were created and amended to provide assistance to the
American public and our economy.
One of these programs was the Paycheck Protection Program.
In a matter of days, the SBA and the Department of Treasury
outlined rules and regulations so that lenders could start
assisting small businesses from coast to coast. The Federal
Government moved quickly, and I would like to commend them for
that.
One of the top SBA officials in charge of PPP testified
yesterday and presented important information to our Committee.
Today's conversation will build on that hearing and will focus
on the critical aspects of PPP loan forgiveness.
As a small business owner for 35 years and the founder of a
local community bank in Oklahoma, I can see how difficult this
process can be for borrowers and lenders alike. My goal, and I
would like to think it is the same for all of my fellow
Committee members, is to make this forgiveness process as
simple and as efficient as possible. We ask our lenders to
carry a heavy burden and our small businesses are being crushed
under circumstances out of their control. We owe it to them to
discuss further ways to streamline the process.
Unfortunately, roadblocks continue to hinder how Congress
can provide more assistance while improving the program. Just
this week, we tried and failed to get a vote on Congressman
Steve Chabot's H.R. 8265 that would improve and extend the
popular program. More work needs to be done and that is why
this hearing is paramount.
It is unconscionable that we would continue to ignore our
Nation's smallest firms that desperately need this assistance.
Small businesses and lenders need full rules of the road in
order to make everyday business decisions. Changing guidance
has presented challenges we need to seek solutions to so this
process can be improved.
I look forward to exploring many of the topics today with
our witnesses. However, I know there were some concerns that a
witness put forward about a specific member of the House and
the way their office conducts business even though this member
is not here to defend himself.
This, however, is not how we conduct business in this
Committee. We routinely strive to work in a bipartisan manner.
It is important that we do. And we do not attack one another
for political gain. And I am extremely disappointed that my
colleagues would allow this testimony to be on the record.
Truthfully, many of the problems that our witnesses will
bring up today could easily be solved if the majority would
allow Ranking Member Chabot's bill, H.R. 8265, to come for a
vote as most of them, if not all, would support it.
All of them have the opportunity to allow this bill to come
for a vote by signing the discharge petition for 8265, which
was filed by Representative Jaime Herrera-Beutler earlier this
morning.
So, I urge my colleagues to take action to help the small
businesses in each of their districts across the country by
signing the discharge petition on the commonsense legislation,
which they all support behind the scenes.
I would also like to say that this is the second time that
I have been disappointed by the majority's selection of a
witness, and I hope that this is not a signal of what the
Committee is becoming.
Thank you, Mr. Chairman. I yield back.
Chairman KIM. Thank you, Mr. Hern. I appreciate your
comments.
I would like to take a moment to explain how this hearing
will proceed. Each witness will have 5 minutes to provide a
statement, and each Committee member will have 5 minutes for
questions. Please ensure that your microphone is on when you
begin speaking and that you return to mute when finished.
With that, I would like to introduce our witnesses before
we begin.
Our first witness today is Ms. Lynn Ozer. Ms. Ozer is
president of the SBA Lending Department at Fulton Bank, a $20
billion regional bank headquartered in Lancaster, Pennsylvania.
She manages all of the SBA lending, which covers my home state
of New Jersey, Pennsylvania, Maryland, Delaware, Virginia,
Washington, D.C., and 249 office locations. She graduated
magnum cum laude from Temple University where she earned a BBA
degree majoring in accounting. Ms. Ozer served as the first
female Chairwoman of the Board of Directors of the National
Association of Government Guaranteed Lenders, and she is
presently Co-Chair of the Technical Issues Committee while
serving as an instructor for the association. Welcome, Ms.
Ozer.
Our second witness is Ms. Amy Bonfig. Ms. Bonfig is the
owner of Little Saints Academy, a childcare center in Central
Minnesota. When so few PPP borrowers have actually applied for
loan forgiveness, Ms. Bonfig has not only completed the longer
application form but has also started an informal network of
fellow childcare centers in Minnesota to help them work through
the forgiveness application process.
Ms. Bonfig, we look forward to hearing your feedback on the
loan forgiveness application process as a borrower and welcome
you here today.
Our third witness is Mr. Jim Parker, a small business owner
from my district. He is the founder and owner of Riverview
Studios and a 42-year veteran filmmaker. He has produced
numerous broadcast programs for public television. During his
career, he has produced hundreds of multilingual documentary
programs for corporate and nonprofit clients. He has also faced
serious obstacles with the PPP forgiveness process, and we look
forward to hearing his perspective on the issues as well.
Thank you for joining us today from the New Jersey 3rd
Congressional District, Mr. Parker.
I would now like to yield to the Ranking Member, Mr. Hern,
to introduce our final witness.
Mr. HERN. Thank you, Mr. Chairman.
Our next witness is Pete Patel. Mr. Patel is the CEO and
president of Promise Hotels, a company he founded with his wife
12 years ago. Promise Hotels is a hospitality business group
that runs a dozen hotels in the Tulsa, Oklahoma area, my
district. With 25 years of experience, Mr. Patel is a current
board member of the Oklahoma Hotel and Lodging Association and
the Tulsa Hotel Lodging Association. He is also a former board
member of the Tulsa Metro Chamber of Commerce.
Mr. Patel, we are grateful that you can take the time away
from running your businesses to talk with us this morning. We
know that you and the other witnesses are very busy, so we
appreciate all of your time. Welcome, and we look forward to
your testimony.
Chairman KIM. Thank you, Mr. Hern.
We are going to start with the witnesses here. So Ms. Ozer,
you are now recognized for 5 minutes and I am going to turn it
over to you. Thank you.
STATEMENTS OF LYNN G. OZER, PRESIDENT, SBA LENDING, FULTON
BANK; AMY BONFIG, OWNER, LITTLE SAINTS ACADEMY; JIM PARKER, CEO
AND DIRECTOR, RIVERVIEW STUDIOS; PETE PATEL, PRESIDENT AND
CHIEF EXECUTIVE OFFICER, PROMISE HOTELS
STATEMENT OF LYNN G. OZER
Ms. OZER. Thank you for inviting me, and good morning,
everyone.
My bank made nearly $2 billion of PPP loans serving 11,000
small businesses that were desperate and lenders nationwide
stepped up to implement this congressionally provided lifeline.
We should applaud the countless success stories of businesses
saved and employees retained. But it has not been easy.
There were frontend issues, especially with eligibility and
lenders' roles and simple no-cost fixes are needed in any
future program extension. We must learn from what did not work.
When it comes to forgiveness, significant concerns need to
be addressed now. Piecemeal guidance continues to create
confusion. There is still no guidance for major issues, and
without answers I cannot help my borrowers. We have no idea how
a guaranty will be honored when a business is permanently
closed or files bankruptcy. If loans have a remaining balance
after forgiveness, we have no idea how we are expected to
service those loans long term. For borrowers requesting
permission to sell to new owners, we have no idea how to help
them.
More importantly, borrowers are confused by the burdensome
forgiveness process and panic that the loans they believed
would be grants if they followed the rules may become
burdensome debt because they cannot muddle through the
paperwork. Borrowers remain confused about the covered period
and how to document payroll expenses, especially if they
struggle with their local government's shifting requirements.
They are concerned about safe-harbor calculations to help
qualify for full forgiveness.
One of our borrowers summarized her angst. I quote, ``I
have tried and read many instructions regarding the forgiveness
application but I still find it very confusing. I have even
listened to multiple webinars. I would love someone to be able
to translate that for me.''
This borrower is not alone. Virtually all borrowers share
this concern and so do lenders.
To add to the confusion, borrowers and lenders see media
reports that Congress will streamline forgiveness. Borrowers
have delayed submitting applications hoping for that change. I
urge quick authorization of a simplified forgiveness for
smaller loans. This must be prescriptive or we will wind up
with another EZ form which really is not making anything
easier. Simplification would provide enormous relief.
Congress must also prescriptively clarify the lender's role
in the forgiveness process identified by GAO as a major
problem. From the outset, lenders believed we would be conduits
for delivering federal assistance because we had the network
and capacity the Federal Government did not have. Other than
providing the capital quickly, our role as lenders was to be
limited.
Only after we made millions of loans did banks learn that
we would have to verify the accuracy of the borrower's
application and that forgiveness could hinge on this. We have
gone from being a conduit to being deeply involved in an ill-
defined process.
At the heart of this issue is that the lender role as
defined by the agencies creates an inherent conflict of
interest. Lenders lend. We should not be the arbiter of who
receives forgiveness from the government, especially when our
decisions determine whether our own funds will be reimbursed.
To this end, I urge you to clarify the lender's role in the
forgiveness process as part of any streamlined application for
forgiveness. I also encourage you to include a strengthened
hold harmless section to better define lender responsibilities
in verifying borrower-provided documents and certifications.
Lenders are on the frontlines in delivering this crucial
aid, and we must fully understand our role to be comfortable
helping our borrowers. Until the many issues are addressed,
many lenders will be reluctant to embrace a new or expanded
program. Most will agree that we need to fully understand how
the forgiveness process will work, how SBA will honor its
guarantees, and what the guidance still to come will say before
we can even consider participating in new programs or
extensions. Otherwise, we will not be able to give borrowers
the help they are seeking and deserve.
Finally, a reminder that the best tool to assist America's
small business long term, in good times and bad, has always
been the regular 7(a) loans. We need the same temporary 7(a)
enhancement provisions like fee waivers and higher guaranty
percentages that have worked previously so well in tough times
we have experienced before. They will work again.
Supporting the 7(a) Loan Program means extending the
section 1112 debt relief payments which are hugely stabilizing
and have been for the existing SBA portfolios and also
encourage new lending. Funding remains for these 1112 payments,
and I cannot think of a better tool to provide meaningful
assistance to small business.
Thank you so much, and I look forward to your questions.
Chairman KIM. Thank you so much for your statement there.
Appreciate it.
We are going to turn it over to Ms. Bonfig now, so you are
recognized for 5 minutes. Over to you.
STATEMENT OF AMY BONFIG
Ms. BONFIG. Good morning and thank you for giving me the
time to share my experience with the PPP forgiveness
application process.
My name is Amy Bonfig. I am the owner of Little Saints
Academy, a licensed childcare center in St. Joseph, Minnesota.
I am honored to have been chosen to speak to your Committee
today on behalf of myself, my lender, a local small business
development center, and 30 fellow childcare centers in Central
Minnesota.
I have also been working with Barry Kirchoff, the director
of the Minnesota Central Region SBDC to gather and share
information as it becomes available. Our local SBDC office has
been a vital resource for Little Saints Academy over the last
10 years and continues navigating through this hardship with
us.
During the start of the pandemic, childcare centers were
asked to remain open and care for essential workers' children.
With no guidance, our collaborative of childcare professionals
joined together seeking information, creating a safe space to
ask questions, feel supported, and make decisions as a group
for the children we care for, our staff, and our businesses.
With little to no financial aid, suddenly the Paycheck
Protection Program became available and I was incredibly
grateful to receive a forgivable loan.
Through this process, I have kept myself and our group
aware of changes. I created a spreadsheet for the group because
it was a very lengthy forgiveness application process. I met
with them via Zoom to help make sense of it when I could barely
make sense of it myself.
I spent much of my time over the days and several months
focused on the success of our PPP loan and the forgiveness. It
was incredibly time consuming, and at the end of our covered
period, after funds were nearly exhausted, the forgiveness
application finally appeared but with a new term, ``owner
employees,'' which was completely mindboggling because we had
to be counted as full-time equivalents on our loan application
and then we could not count ourselves in the full-time
equivalent count for Safe Harbor. Because of that I was unable
to spend my entire loan in 8 weeks. Extending 2 weeks of the
payroll, I can benefit from the entire loan but we did not find
out about the 24-week extension option until we were in our
eighth week and had exhausted most of our funds.
After my covered period, I had no choice but to lay off
staff. With the uncertainty of COVID-19 and the ability to stay
open or even meet the full-time equivalent Safe Harbor
criteria, I was too afraid to take the 24-week option. Now the
rules have changed again but the SBA is not giving my lender
needed information to submit my application.
I do understand the concept and the intention of the
program, but without forgiveness, the reality is I currently
have an unforgiven loan that was used to pay my staff the
benefits they really should have been able to collect through
the Minnesota Unemployment Program.
The childcare directors and owners that I bring with me
today have expressed similar fear of failure regarding
forgiveness. Many do not understand the complicated rules, the
cryptic stipulations of the application, and most do not have
the luxury of time to sort it all out.
With that being said, I want to steal a moment to advocate
for the recognition of small business in the childcare
industry, especially after watching my brave and resilient
colleagues step up during this time of fear, uncertainty, and
chaos. Please understand that we need your support. We need
peace of mind knowing that our loans have been forgiven. As we
look to the future financial stability of our programs, we run
our daily businesses on tight budgets with our fingers crossed
that we will make it financially another day. We did this in
the old normal and we are doing it in the new normal.
We would like you to consider other expenses that may be
relatable to forgiveness, such as PPE, thermometers,
sanitizers, cleaning products, bleach, even professional
cleaning services. For centers that do not qualify for the USDA
food program, including the cost of feeding the children would
even help tremendously.
I would like for you to consider making this a simpler
process. The EZ form still needs many of the calculations in
the long form to fill out the application honestly and
accurately. Six unrelated date ranges to pull reports and
gather required information from is way too complicated. Please
consider some degree of automatic forgiveness, or at least a
forgiveness process with fewer criteria.
On behalf of my fellow childcare providers, I thank you for
allowing me to speak to you on behalf of our situation as you
move forward with decisions about the PPP loan forgiveness.
Chairman KIM. Thank you, Ms. Bonfig. Thank you for sharing
your experiences there.
I want to turn it over to Mr. Parker. Mr. Parker, you are
now recognized for 5 minutes. Thank you.
STATEMENT OF JIM PARKER
Mr. PARKER. Chairman Kim, Ranking Member Hern, and members
of the Committee, thank you for the opportunity to speak to you
about our experiences with the Paycheck Protection Program and
the program's loan forgiveness process.
My name is Jim Parker. I own Riverview Studios, a video
production company in Bordentown, New Jersey. I am a member of
the Executive Committee of the Main Street Alliance of New
Jersey, a network of small businesses in the Garden State and
the Chapter of the National Main Street Alliance.
Earlier this year I applied for PPP funds and received
$11,200 through the program. Having used the PPP funds by early
summer, I am now waiting to begin the process of closing out
the loan. In my case I am hopeful that 100 percent of the loan
will be forgiven under the rules of the program.
Now, I say hopeful because I cannot be sure and say for
sure that that will be the case. As I and my operations manager
are just beginning the process, we found that much could be
done to clarify the terms of forgiveness and the process to
obtain it.
It is still unclear what the timeline is for beginning the
process, the steps we need to take to complete it, or the
criteria we will be judged on to receive forgiveness.
The documents we received from our bank thus far have also
raised concerns about the likelihood that the entirety of the
loan will be forgiven.
For example, it looks like we will be requested to provide
information about our mortgage expenses during this time and
expenses related to other fixed costs, like utilities. We spent
the entirety of the funds on payroll, so we expect the sum will
be forgiven but the application is confusing and leaves us
concerned that our spending on fixed costs will reduce a
portion of what portion of the loan is forgiven.
We are also concerned about the lack of clarity regarding
any appeals process. What if we are requested to repay a
portion of the loan but to believe that that decision has been
made in error? Small business owners in our network in New
Jersey and nationwide have experienced other roadblocks in the
forgiveness process. One member's bank has contracted out the
forgiveness processing to a third party but the website that
this third party has built the process applications now
functions to the point of uselessness. Another member has
reported that their application using the alternative dates
option is being questioned because her payroll falls on the 5th
and 20th of the month rather than every 2 weeks.
Several members have received notice from their banks that
the forgiveness process will be put on hold indefinitely
because proposed legislation may change the rules regarding
forgiveness and other Main Street Alliance members, especially
those in the restaurant industry have expressed concern that
they will miss out on forgiveness because they have not been
able to rehire staff at the necessary level to qualify for
forgiveness because the business has not picked up sufficiently
to necessitate their pre-pandemic workforce.
Our experiences illustrate a process that has thus far been
opaque, arbitrary, and uneven with private lenders choosing how
and when they will implement the forgiveness portion of the
program. This risks repeating the mistakes made in the design
and rollout of the program itself which excluded vast portions
of the small business sector, often the most vulnerable
businesses and it has worsened economic inequality especially
for businesses owned by people of color.
I count myself as one of the privileged businesses who
received Federal funds, and I am grateful. I am also relatively
competent that those same privileges that helped me access
these funds would help me in the process to get them forgiven.
I know that not every small business owner finds himself in
this position. Many are going into the process themselves
without the help of an expert staff member. I know if it were
left to me to sort this process out I would be in far worse
shape.
For these reasons, Main Street Alliance supports
legislation that would provide automatic forgiveness for loans
under $150,000. Given the confusion surrounding the process and
shifting guidelines, this would level access to forgiveness and
alleviate stress for many small business and microbusiness
owners, particularly those with less access and support from
their banks and accountants. And because most businesses have
now exhausted their PPP, we believe the smartest plan to save
our small business economy starts with grants, not loans, so we
can cover payroll and keep people employed through the
pandemic.
This is an existential crisis for small businesses in
America. I believe it is not trickle-down but rather trickle-up
economics that fuels our economy. Putting funds in the hands of
ordinary people puts money back into the economy and keeps
America working. We are counting on our leaders to take the
bold action that this crisis requires.
Thank you very much for your time and interest in Main
Street small businesses.
Chairman KIM. Thank you, Mr. Parker, for your testimony. I
appreciate that.
We are going to now move over to Mr. Patel. Mr. Patel, over
to you for 5 minutes.
STATEMENT OF PETE PATEL
Mr. PATEL. Good morning, Chairman Kim, Ranking Member Hern,
and members of the Committee. It is an honor to speak before
you today and thank you for the opportunity to share my story
with you.
My name is Pete Patel. I am a proud first-generation
American. My family and I immigrated to the United States from
India in 1979 in search of the American Dream. We found it in
Tulsa, Oklahoma, as hoteliers and small business owners. I am
also a member of the Asian-American Hotel Owners Association
which represents 20,000 members who own almost half of all the
hotels in the United States.
My wife tina and I founded Promise Hotels in 2008. We own
and operate franchise hotels in Eastern Oklahoma. During the
past several years, our businesses have done well. We have
grown our operations and created and reacted to favorable
economic conditions.
Before the economic crisis caused by COVID-19, the lodging
industry was enjoying record occupancies and profitability.
Unfortunately, the coronavirus pandemic halted travel almost
overnight. During our busy season, our hotels should have
occupancies at about 80 percent. Instead, we have been lucky to
hit 20 percent in some weeks. Our revenues have fallen by 50
percent. Tragically, we have had to lay off employees for the
first time in my career because we simply do not have enough
customers coming through our doors.
At the onset of the virus and as travel restrictions took
hold, hoteliers and small businesses needed a lifeline. We are
grateful that congressional leaders came together so quickly to
pass the CARES Act. In particular, I appreciate how Congress
prioritized assistance to small businesses and our employees.
We used the PPP predominately towards payroll and utilities.
The PPP did have a few drawbacks, some of which could not
have been known at the time it was created. First, the maximum
loan amount of 2.5 times monthly payroll only carried us for a
few months. We are now at the end of that period and funds have
been exhausted.
Accordingly, we have reviewed the forgiveness process and
it has proven to be exceedingly complicated. From the time that
PPP was created, the guidelines for forgiveness was often
unclear and fluid. The complexity of the forgiveness
application port of each business is also quite time-consuming
and burdensome.
I would also like to note that the PPP funds have been
crucial to the survival of our business. I understand there is
discussion in Congress about creating a second round of funding
for small businesses that have suffered greatly because of the
economic downturn.
As the hotel industry has lost our busy season and are now
facing our slowest time of year, I strongly urge you and your
colleagues to quickly pass legislation that would authorize a
second round of PPP to help us to save jobs and to keep our
businesses open.
At the beginning of the crisis, our banks would work with
us to defer payment on principal and interest for a few months.
Largely, however, that forbearance has run out and banks are
telling us that our notes will come due soon because of the
pressure there from banking regulations.
The Main Street lending program was designed to help small
and medium-sized businesses survive their crisis by providing a
critical bridge when they needed it the most. However, asset-
based businesses have been excluded from participating in this
program because of the underwriting methods employed by the
Federal Reserve. It is small businesses like hotels that have
suffered the most in this unreasonable standard.
Earlier this week, Secretary Mnuchin and Chairman Powell
asserted that conditions do not warrant expanding the Main
Street Lending Program to include hotels and other asset-based
businesses. I urge the members of this Committee to work with
your colleagues to expand the Main Street Lending Program for
asset-based businesses like our hotels.
Chairman Kim, Ranking Member Hern, and members of the
Committee, I sincerely thank you for giving me the opportunity
to share my perspective on the outlook of the lodging industry
in the United States. I am grateful for your leadership and
look forward to solutions you propose to help the country
during this unprecedented pandemic.
Thank you so much.
Chairman KIM. Thank you, Mr. Patel. I appreciate your
testimony here.
We are going to move over into the question period, and I
will start by recognizing myself for 5 minutes here.
As I mentioned earlier, I have spent quite a bit of time
touching base and visiting a lot of small businesses in my
district as they are facing these challenges. And what I have
consistently heard from them is a message about unease about
what the future holds for small businesses and their employees.
My focus here is that our economic recovery touches everyone,
not just those at the top, and we need to make sure that the
smallest businesses are being brought along in the post COVID-
19 recovery. The delivery of the PPP loans was a good first
step, but I worry that the complicated piecemeal guidance of
the loan forgiveness could become burdensome for the business
owners that we have heard today.
Getting that clear information of forgiveness is critical
to the businesses, and I wanted to start with Ms. Ozer about
what you described because you described it sort of in great
detail here and I just wanted to kind of pull out a few pieces
here.
As a seasoned SBA 7(a) lender, can you evaluate the quality
of the PPP loan forgiveness guidance you have received from SBA
and Treasury? And also, can you also evaluate the user-
friendliness of the loan forgiveness application for the
average small business borrower? I know you touched on some of
this in your testimony but I just want to kind of bring it out
a little bit more here.
Ms. OZER. Thank you so much for your question. And
Congressman Kim, I do have 226 PPP loans in your district for
over $48 million. So I am quite familiar with the 3rd District
in New Jersey.
That being said, to answer your question, and I know I did
point this out in detail in my written, but the lack of
guidance from the SBA is something that I have never seen
before in all my years dealing with the SBA. Their guidance is
usually very prescriptive and clear. This is not the case with
the PPP program. We certainly understand the speed at which
they had to give out guidance but it has come piecemeal and it
is confusing. And if it is confusing for the lenders, that just
translates to the borrowers. We cannot help our borrowers if we
ourselves do not understand the guidance. So that is what has
been in my opinion one of the biggest problems.
The application itself is burdensome. As you just heard so
eloquently from your three witnesses, every single one of them
can point out the problems in the application process. Again, I
talked about the EZ form, which is not easy. It is just
different. And it still requires the same amount of
documentation. And I also talked about the problems in the PPP.
With the conflict of interest it puts the lenders in a really
bad position. We are unclear of our role. You know, when we
jumped into this with both feet because we absolutely wanted to
support the communities that we lend in, our borrowers, our
customers, and the entire small business community because we
are working through unprecedented times, but we were asked to
be the conduit. We were not acting as lenders. We lend but we
were asked to simply pass on information and deliver funds
through our network that the government could not do. And this
was a problem. And now they are asking us to verify information
and verify certifications and documentation from the borrowers.
That puts us in a very unusual position because we would love
to see every borrower have forgiveness, and we would love to be
reimbursed for all the money that we have put out on the
street. But there is no clear guidance.
Chairman KIM. Thank you for that.
Mr. Parker, I want to turn to you. I understand you said
you have a business manager on staff who is helping you with
the loan forgiveness application process. I also understand you
have four employees on staff, a true microbusiness. I cannot
imagine that without that support staff, you know, how this
process would be for you. So can you expand on the value of
having someone on your staff with expertise on the business
side of things to help you navigate this PPP application
process? And what impact has that had on your ability to focus
on the revenue generating activities of your business which is
producing documentaries and digital video?
Mr. PARKER. Thank you. Yes.
I have been really fortunate to have access to a full-time
person whose pretty much sole job is to take care of the
financial aspects, to navigate the application process and all.
But even she has a hard time getting the information. I also
have access to an accountant that I trust who is available to
me. I am a producer of films. I am not an accountant. I was
never trained in business, so every minute that I spend doing
things that are not related to producing a program is time
taken away from reducing our income.
So it has been invaluable to have access. I have been very
fortunate. I understand that many businesses do not have that
same benefit that I have. I never could have done it alone. I
would have had to forgo the process but the amount that we did
receive helped us immeasurably. It enabled us to keep people
on, and we were going into a very busy time at the time COVID
hit. So I needed actually additional staff. And having these
funds enabled us to maintain our business and to pivot and to
serve our customers. We are only able to do the work if our
customers need us. And so we are dependent on our customers
being able to pay us as well. So it is a full circle.
Chairman KIM. Well, it certainly hits the challenges of
staffing during these particular times but also needing to
focus bandwidth on these complicated issues.
My time has expired so I am going to turn it over to the
Ranking Member. Mr. Hern, you are now recognized for 5 minutes.
Mr. HERN. Thank you, Mr. Chairman.
Mr. Patel, as you described in your testimony, the hotel
industry is very unique. This means that your industry has
faced very specific challenges during the emergency crisis that
other industries may not have been confronting. It comes from
debt service. Can you talk more about the environment in your
territory in Oklahoma and the unique challenges that you face
and your industry faces?
Mr. PATEL. Thank you, Congressman Hern.
Yes. We are facing some deep challenges, primarily of just
having funding to continue with operations. Most hotels
throughout the country have seen revenue drops anywhere from 50
percent to in some cases 80 percent. Some are still closed in
major metropolitan areas.
We predict that a third of all of the hotels may see
closure, and that is saddening to hear that an industry that
has done so well and is my livelihood, that is the only
livelihood I know, could see closures. We need Congress to step
in to give us some additional assistance.
The pandemic is something that nobody asked for. And with
regulations on closures and travel restrictions we were
probably the hardest hit industry out there. And so again,
without additional help there will be a huge amount of
closures. And then it will put our community banks who have
been very generous to us when we decided to grow and lend more
money, it will put them in a compromising position also. So I
think that is some of the things that we need to also keep in
mind is it is a trickle down. Other industries will be affected
with what happens in the hospitality industry.
Mr. HERN. Thank you so much, Mr. Patel.
I have listened to all the testimony very intently, read it
all prior to the Committee hearing, and I just want to say to
each of you, thank you for what you have done to survive and
continuing to survive. I know that is no way to run a business.
As I mentioned being in the small business arena for so many
years, you really want to provide opportunities for your
employees, opportunities for growth, promotion, and also to
expand your businesses.
With that said, I know many of you know that there is
roughly $135 billion of unused PPP money that is out there, and
if we could, for the essence of time here, I would just like to
get your thoughts on this. Just a simple yes or no, we will
move through. Would you support a second round of PPP loans,
extension of the PPP duration, expansion of covered PPP
expenses for PPE, and a simplified forgiveness process?
Mr. Patel, we will just start with you since we are talking
already. Would you support that?
Mr. PATEL. Yes.
Mr. HERN. Mr. Parker?
Mr. PARKER. Absolutely. Yes, I think so. I think it is
important.
Mr. HERN. Ms. Bonfig?
Ms. BONFIG. I would be grateful to be able to participate
in it again.
Mr. HERN. Ms. Ozer?
Ms. OZER. Conditional, yes, because until we fix the
situation at hand I think lenders are a bit reticent to jump
back into the pool because the existing program has quite a few
flaws and especially the forgiveness process. We are stuck in a
place where we do not have clear directions. We need a
simplified process and procedure. We need to define lender
roles. We need hold harmless for lenders. We need to strengthen
the hold harmless provision that is in there. We need a guide
that takes 27 IFRs and two rounds of FAQs and puts them into
one document with clear guidance so we as lenders can help our
borrowers. We jump in with two feet but now we are sort of
stuck in the mud and we need to get out and we want our
borrowers to get out as well.
Mr. HERN. Well, I thank you for that. And what I know,
again, having never been in politics before I became a member
of Congress less than 2 years ago, is that small business-men
and women in America do not care two hoots about politics. They
just want to figure out how again they can take care of their
employees, their customers, and grow their business. And I
would encourage us all to work hard on getting H.R. 8265, which
does a lot of what Ms. Ozer just said, to get it on the floor
for passage. I think it would be an overwhelming majority that
would pass it and we can get these other $135 billion out to
folks like our witnesses.
Mr. Chairman, I yield back. Thank you.
Chairman KIM. Thank you, Ranking Member Hern.
We are going to turn it over to Congressman Schneider for
your comments and questions here. It will be you for 5 minutes.
Mr. SCHNEIDER. Thank you, Chairman Kim. And I appreciate
you hosting this important hearing, and I thank you as always
and the entire Committee and the Committee staff for navigating
the difficult dynamics of congressional oversight during this
unique time.
Data from the Small Business Administration demonstrates
that the Paycheck Protection Program helped save more than
90,000 jobs in my district alone. It was a crucial lifeline to
thousands of small businesses in Illinois and around the
country.
I represent the suburbs of Chicago. Earlier this month, we
experienced a week of unseasonable cold temperatures and it was
a wakeup call as local brewery owner noted, it put everybody on
notice of what we are going to do when it is 30 degrees outside
and can only operate at 25 percent capacity inside.
As winter looms, the PPP funds have now been mostly
depleted. Meanwhile, COVID is still coursing through our
country and the pandemic is ravaging our economy. While the
President and his administration continue to play down the
crisis, small businesses are struggling to see the path
through.
It is not enough that they struggle with the economic
challenges of this crisis; they also now have to deal with the
unnecessary complexity associated with determining their
eligibility for PPP forgiveness. This is a real challenge.
We will never get through this crisis until we beat back
the virus. But meanwhile, we need to make sure that we are
providing relief to our small businesses so that it can
continue to operate and provide critical jobs within our
community.
We need to work to get to the recovery where these
businesses can see their future and start to grow again. And
ultimately, most importantly, get to a place where we knew our
economy.
But this cannot happen without ongoing support. So as
others have noted, I am hopeful that we can work to find a path
to another elite package that will extend PPP and provide new
resources for these businesses.
But as we look at the current situation, if I can turn to
Ms. Ozer, as a lender, you have seen firsthand how businesses
are trying to navigate through this forgiveness process, the
cost of the complexity for that. Do you have a sense of how
many of your clients have had to contract with outside help to
get them through the process of applying for forgiveness?
Ms. OZER. Thank you for the question, Congressman.
I do not have specific data on that but anecdotally, I can
tell you that it runs the gamut. As one of our witnesses
suggested, the businesses with the wherewithal have certainly
contracted with outside vendors. We know just simply from the
amount of questions that come into our call center that all of
the borrowers need outside help. The ones that need it the most
are the ones with the least amount of capital to go and hire
outside help. So what do they do? They look to the bank. And
that is problematic because we need to help them and we do not
have clear guidance.
Mr. SCHNEIDER. Thank you. And then the smallest of
companies that do not have the resources, how are they applying
for the forgiveness? Or are they facing a situation where they
are just going to be stuck having to pay back the loan?
Ms. OZER. Well, the latter is an unfortunate possibility.
But, we as the lender have, and they, as the borrower hear time
and time again in the media that there is going to be a
streamlined forgiveness process which we are fully supportive
of. This is not automatic. We know the government needs to make
sure that they prevent against any kind of fraud and abuse. But
a streamlined process for the lenders and the borrowers to be
able to help the smallest of borrowers is essential. And that
is what we are looking for. And honestly, the amount of people
that have not applied for loan forgiveness is pretty high
compared to those who can because they are all still hoping for
the streamline forgiveness because they are not getting the
answers from the lenders because the lenders do not have the
answers to give them. So a streamlined application is critical.
Mr. SCHNEIDER. Okay. Thank you.
In the last few seconds I had, if I can turn to Ms. Bonfig
and thank you for sharing your story. You are trying to figure
out how to navigate the next few months but the services you
provide to parents who are trying to get back to work are also
critical. Or do you see the biggest challenges looking at----
Ms. BONFIG. I see us having positive cases being a huge
challenge and continuing to charge the parents tuition so that
we stay afloat. Some of them are not being paid and they are
working at home but keeping their kiddos with us. We had a
positive case and we had to contact the Minnesota Department of
Health and a college student working for the Department of
Health got to make the decision to close us down. And that was
very frustrating. We had to close one of our classrooms for
over 7 days and it cost us about $8,000 but, you know, how do
we make that up?
Mr. SCHNEIDER. So that challenge is real.
Ms. BONFIG. I actually am part of a group that meets with
the Governor's Children's Cabinet in Minnesota. And we have
talked extensively about having some sort of a program like
unemployment for childcare, and maybe it is not the childcare
but that is who we are dealing with right now. That maybe we
have some sort of an unemployment-type bank where we can call
in and say, okay, we had to close this classroom for 7 days.
This is the amount of income, tuition that we had to forgo, and
have some kind of help that we have the confidence to know it
is there. It would be so helpful to a lot of us. And keep us
honest. That is one of the biggest things that I fear is that
parents are not going to tell the truth about their kids being
sick. Providers are not going to be honest about sickness in
their center because they are fearful of losing income. And
that is probably not just in our industry but that is my worry
for us.
Mr. SCHNEIDER. No, I appreciate that. And I am over time so
I appreciate the time. It is just important that we have
clarity, that we have simplicity, and we have consistency in
the application of these policies.
So I thank the witnesses. I yield back the balance of my
time.
Chairman KIM. Thank you for yielding back.
We are going to turn it over to Congressman Stauber. Over
to you for 5 minutes.
Mr. STAUBER. Well, thank you very much, Mr. Chair.
You know, I sit here dumfounded. The Paycheck Protection
Program, which has provided a lifeline to small businesses
across this Nation during this pandemic has been shut down for
48 days now. With over $135 billion in funding, the PPP is only
shut down because of speaker Pelosi's unwillingness to bring
meaningful legislation to the House floor. The speaker would
rather use small businesses as political pawns rather than get
things done.
H.R. 8265, the legislation that Ranking Member Chabot
introduced and I have cosponsored, would reopen the PPP through
the end of this year. On top of that, it would give small
businesses the ability to receive a second loan. It would
provide more flexibility in how PPP dollars can be spent, and
it would simplify the forgiveness process.
So instead of working on legislation that would bring more
relief to 30 million small businesses across this great Nation,
Nancy Pelosi and democrat leadership have been focused on
passing legislation that gives them cheap political talking
points for this election cycle. In fact, the speaker was so
afraid that the PPP legislation would pass, she canceled a
session for today. She knew that her moderate members and my
good colleagues on the other side of the aisle were going to
sign that discharge petition which would force that bill to the
floor and help small businesses across this great Nation who
are the engine of our economy. And we cannot lose sight of the
American small businesses who are looking to us for financial
relief in their most desperate hour, which is why I signed that
discharge petition this morning. And that calls for the
immediate consideration of H.R. 8265. Partisanship should have
no place in these halls during this pandemic and it is my hope
that we vote on this important legislation soon.
So with that being said, I want to turn my questions to Mr.
Patel. Mr. Patel, thank you for being here, and for the sake of
time I simply want a yes or a no answer to the following
questions if you are okay with that.
So Mr. Patel, would it be helpful to small businesses to be
able to apply for PPP loans through the end of 2020 as would be
the case if H.R. 8265 was signed into law?
Mr. PATEL. Congressman, absolutely, yes.
Mr. STAUBER. Okay. Mr. Patel, would it be helpful to small
businesses to have access to a second PPP loan as would be the
case if H.R. 8265 was signed into law?
Mr. PATEL. That would be greatly needed for our industries
and many other industries. Yes.
Mr. STAUBER. Mr. Patel, would it be helpful to small
businesses to have more flexibility in the eligible expenses
for their PPP loan such as operation expenditures, property
damage costs, and personal protective equipment as would be the
case if H.R. 8265 was signed into law?
Mr. PATEL. Yes.
Mr. STAUBER. Mr. Patel, would it be helpful to small
businesses to have a simplified forgiveness process especially
for loans under $150,000 as would be the case if H.R. 8265 was
signed into law?
Mr. PATEL. Yes.
Mr. STAUBER. You know, it would seem to me that the answer
is simple. Speaker Pelosi needs to take swift action to help
small businesses across this great Nation rather than using
legislation for cheap political bargaining chips. I request and
demand Speaker Pelosi bring H.R. 8265 to the floor immediately
to help the small businesses across this great Nation which
still need our help. They are the engine of our economy. And
with that, Mr. Speaker, I yield back.
Chairman KIM. Thank you. Appreciate it.
I want to turn it over to Congressman Spano. You are now
recognized for 5 minutes.
Mr. SPANO. Thank you, Chairman Kim and Ranking Member Hern
for hosting the hearing today. I want to thank each of you for
testifying about your experience with the PPP forgiveness
process.
As of August 20th, in my district alone, which is the 15th
District of Florida, Central Florida, 10,254 businesses have
received $304 million in PPP loans saving tens of thousands in
jobs. For many, the program has been a lifesaver. I have
actually talked with so many of them since the launch of PPP.
One, for instance, Mr. Powell I can think of specifically, he
owns a company called Boulder Athleticwear in Plant City and
they manufacture women's athleticwear. The program was a
lifesaver for his business because it was an easy application
process that provided a quick capital infusion to help make
sure that he could retain his employees through the retail
closures. One of Mr. Powell's biggest concerns as he goes into
the forgiveness process is that while the PPP funding made a
significant impact, the business has still not fully recovered
as is the case with the vast majority of businesses across the
country. His biggest request has been for a second round of PPP
funding to help him as the economic recovery continues.
My question is for Ms. Ozer. You mentioned that Fulton Bank
has approved nearly 11,000 PPP loans for a total of almost $2
billion and that you have already received the notices from
many of your PPP borrowers that have either closed their doors
or filed for bankruptcy. And so my question to you is out of
those 11,000 semi PPP loans that Fulton Bank has approved, do
you have a specific figure or do you have a sense, one or the
other, for how many notifications like this your institution
has received? So how many of these 11,000 businesses would you
say at this point today have either closed their doors or filed
for bankruptcy?
Ms. OZER. I do not have the exact figures. Anecdotally I
have spoken to at least five different businesses that are
planning to close. However, there are borrowers out there that
we do not know about, and so I cannot put a figure on it. The
problem is that without being able to have any direction on
what to do with these loans if a borrower does go out of
business or does declare bankruptcy, we question how we collect
the guarantee from the SBA because there is no guidance on
that.
Your question about the exact numbers, I do not know. I
mean, we have had chatrooms with lenders all across the country
who have been experiencing this that businesses are closing and
some of them are filing bankruptcy but there are also
businesses that are trying to sell and there is not enough
guidance on what we should do for them if they have a PPP loan
and they want to sell their business. They need to strike while
the iron is hot. And they are unable to sell their business
because there is no guidance on how we should do that if they
do have a PPP loan.
So there are a lot of things that need to be fixed in this
program so that we can clearly help our borrowers.
Mr. SPANO. Thank you, Ms. Ozer. I appreciate that. And I
think your experience is consistent with my experience and many
of the lenders that I have spoken with, and certainly the small
business owners I have spoken with, some of whom have gone out
of business after literally decades of being open, some of them
generational businesses, that they spent literally decades
building and have put a lot of blood, sweat, and tears. So I
would also encourage as Mr. Stauber just said a moment ago for
leadership in the House to put aside some of the partisan
issues particularly as we lead up to the election here, let's
put the interest of the American people, specifically our small
businesses, let's figure out what we need to do to fix the
problems that the lenders are having in getting confirmation on
what to do to get these loans forgiven. And I think in large
part this legislation would fix those issues. But let's hear
the concerns and the cries really of small businesses who are
trying desperately to keep their businesses open.
And with that I yield the remainder of my time.
Chairman KIM. Thank you, Congressman, for yielding back.
I just have another question or two and just wanted to
throw this out there, and if anyone else has any or any other
members have any further questions, please let me know and we
can do that, otherwise, we can start to wrap up.
Ms. Bonfig, I want to kind of revisit something that you
had mentioned. As a borrower, you know, you were describing the
complexity of that situation, the complexity of the EZ Form and
the others and the time-consuming aspects of that. And I would
like to just see if you could give me a little bit more
specificity about what you are saying about the complexity even
though the EZ Form and how it does not actually give you that
much more leeway than sort of the EZ form. I just want to kind
of hear this in your own words from your experience.
Ms. BONFIG. Okay. I did the full long form. As soon as it
came out I started working on it and I created a spreadsheet to
help me through it because I had so many different sections, so
many dates and information that I needed to add in there and I
could not just use current staff. I have to go back and pull X
staff, staff that was no longer with me and find out their
information. For the current term, all the terms that were
asked for in the long form. It was exhausting. It was
frustrating. There is no easy way to pull the information
quickly.
So after having that done, I literally had just turned mine
in and the EZ form came out. So that was frustrating in itself
but I started looking at the EZ form and the reality is you
still have to do almost all the work behind the scenes. They
just changed the front page a little bit. So you still have to
go back and you have to fill out the worksheet. You have to
fill out Schedule A. Schedule A gives you six or seven little
lines to put your staff in. And I am not wrong. When you have
30-plus staff, you have to create your own spreadsheet. I mean,
you have to, you know, you have to do what you have to do to
get the information together. But I wonder how many people who
put this information together actually step into a business and
try to actually apply for the forgiveness because I think if
they had there is a lot of this that is so confusing when you
read it. And I do not consider myself a dumb person. I do not
consider myself a genius either, but this should be easy enough
for me to understand the first time I read it. I should not
have to go back to it over and over and over again and go I do
not understand what that means. I do not understand what they
are asking for here. It is very, very confusing.
I do not know how to help some of the people I am trying to
help because if you read on the application, the full-time
equivalent reduction safe harbor one. If you just take 15
seconds and read through it, you know, okay, wait a second. I
have got to go back and read that again because that made no
sense. And so, and again, the owner-employee aspect of all of
it, when that came through that was very frustrating because I
have a partner who was not an owner last year but was an
employee and now it said that I can only use this much of 8
weeks of what she made last year as an owner-employee. Well,
she was not an owner so 8 weeks of zero still equals zero.
In the same regard, I have a partner who was not an
employee last year but is now both an employee-owner. He made
zero last year. Zero times 8 weeks is still zero. So now I
cannot count any of their income. And there is nobody answering
these questions.
I actually had our representative from the Small Business
Development Center email a member of the SBA and the response
that we got back was ``work it out with your lender.'' So Lynn,
I am sure that you are probably feeling those things, too.
``Work it out with your lender'' is not an appropriate answer
to come from the SBA who is running the program.
Chairman KIM. Thank you, Ms. Bonfig. And thank you, all of
you, for just your honest challenges and assessments of what is
happening here.
Mr. Patel, my district has a lot of shore towns, a lot of
tourism aspects, a lot of hotels and hospitality that are
struggling. Mr. Parker is from my district. He knows how
difficult things have done throughout there, especially in our
hometown there in Bordentown, which is a small business town
and, you know, folks are trying to do everything they can to
try to make that work.
Ms. Ozer, the way in which you have been talking through
this has been incredibly helpful, really just giving us some
sense what you are seeing because you are seeing across the
board. You have seen this on a macro level which is really just
helping fill out some of the conversations here that we have
had.
Ms. Bonfig, you know, thank you again. As a father of a 3-
year-old and a 5-year-old, I know how tough it is for childcare
centers and you are trying to do everything that you can to try
to do this right, keep the kids safe, you know, keep our
families safe. It is a tough business even in normal times. So
thank you for what you are doing there. I really appreciate
that.
For us, as Congress is weighing solutions for these small
dollar PPP borrowers seeking forgiveness, you know, we have to
keep in mind that simplicity will be key for most small
businesses here. The simple fact is that these firms that study
the microbusinesses do not have accountants or attorneys on
staff as we have heard today the challenges that many of you
are facing and would therefore face additional and unnecessary
barriers to accessing full loan forgiveness.
SBA and Treasury have come together before to provide a
somewhat abbreviated EZ forgiveness application, but as we just
heard today it is still not easy enough for the average small
business owner. There is still a lot more that we have to do.
Agencies should come together once again and provide a
streamlined loan forgiveness application for small dollar
borrowers who represent the vast majority of all PPP borrowers.
If the agencies insist on the status quo, I am sure the members
of Congress on this Committee will work together in a
bipartisan way as we have so often in the past to craft a
solution to these problems.
I ask unanimous consent that members have 5 legislative
days to submit statements and supporting material for the
record.
And without objection, so ordered.
And if there is no further business before the Committee,
we are adjourned. Thank you so much for participating today.
[Whereupon, at 10:39 a.m., the subcommittee was adjourned.]
[Mr. Jim Parker did not submit his Responses to QFR's in a
timely manner.]
[Mr. Pete Patel did not submit his Responses to QFR's in a
timely manner.]
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