On Thursday, Republican Whip and Select Subcommittee Ranking Member Steve Scalise urged Select Subcommittee Chairman Jim Clyburn (D-S.C.) to narrow his inquiry into the implementation of the Paycheck Protection Program (PPP) since the Small Business Administration and the Department of Treasury have agreed to provide the requested information and data.
In a letter, Ranking Member Scalise explained that while Democrats have alleged without evidence that banks created “two-tier systems" to “benefit wealthy existing clients at the expense of truly struggling small businesses in underserved communities" the facts currently available to the Select Committee show the opposite.
The evidence shows, contrary to Democrats’ assertions, loan applications were processed on a first come, first served basis and the administration made a concerted effort to reach underserved and rural businesses. Furthermore, the evidence also shows Democrats mischaracterized why some loans were processed at different speeds. Documents and information show applications from existing customers tended to move faster because of vetting requirements related to terrorism financing and money laundering - not bias.
“Congress asked this administration and our nation’s banks to undertake the largest relief effort in American history. At the same time, we asked our country’s lending institutions to become economic first responders as millions of our citizens were losing their livelihoods," said Ranking Member Scalise. “Speed and decisive action were paramount to save livelihoods. The facts show that the Trump administration and PPP lenders worked around the clock to do what we asked of them. They moved mountains in developing the technology and processes that allowed PPP to help 4.8 million small businesses and keep millions of Americans employed throughout this country at a time of crisis. The lenders and the federal government agencies should be commended for that, not required to turn over duplicative sets of documents and information."
Key selections from the letter:
“You and your colleagues sent letters to the Treasury Department, the Small Business Administration, and eight national banks seeking documents and information related to the PPP … Considering the exculpatory information obtained pursuant to your investigation, and the redundant and extraordinarily burdensome nature of your requests, we respectfully advise you to withdraw your allegations and close this inquiry with respect to the banks."
“The evidence shows the systems they built-in a matter of weeks-did not consider an applicant’s wealth, as you allege. In fact, bank staff who processed and submitted applications to SBA had no way to determine whether an application came from an existing client or a new customer."
“The evidence further shows you and your colleagues mischaracterized why banks were able to process applications from existing clients more quickly than those from new customers. Simply put, the disparity is attributable to vetting requirements that apply to new customers. Those vetting requirements exist so the Treasury Department and financial institutions can detect and prevent money laundering and terrorism financing."
“In a series of briefings, the banks confirmed that the requirement to collect and verify Bank Secrecy Act information from new customers allowed applications from existing clients to move through the process faster. When the initial round of PPP funding expired after 13 days, bank employees continued to process thousands of applications from new customers. When Democrats in Congress stopped holding small businesses hostage and agreed to provide additional funds for the program, bank employees once again worked around the clock to compile the backlog of applications into batches to submit to SBA when the program re-opened."
“In light of the Treasury Department’s commitment to provide the data you requested, you should withdraw your request to the banks and allow them to focus on continuing to service PPP applicants. We look forward to continuing to work with you and your staff to reduce waste, fraud, abuse in these programs quickly established in the wake of an unprecedented global pandemic."
The truth about the PPP program:
* The PPP has given out 4.9 million loans from 5,458 lenders totaling over $521 billion.
* The program has helped approximately 50 million American workers and over 72 percent of our country’s small businesses.
* In just a few weeks, the administration increased from the 1,700 lenders that participated in 7(a) in 2019 to nearly 5,500 lenders for PPP.
* More than 70% of PPP loans were given to businesses with less than 10 employees
* $106 billion has been provided to businesses in Historically Underutilized Business Zones (HUBZones), accounting for more than 20% of all PPP funding.
* Data from the administration show approximately 210,000 PPP loans totaling $16.3 billion to Community Development Financial Institutions (CDFIs) and Minority Depository Institutions (MDIs).
* 424 CDFIs and MDIs across the country participated in PPP
* In a series of briefings the banks confirmed to the Select Subcommittee that the legal requirements to gather information from new customers allowed applications from existing clients to move through the process faster, contrary to Democrats’ allegations that certain parties received preferential treatment.
* The information obtained by the Select Subcommittee showed that Treasury and SBA took a series of actions while the program was open to ensure rural and underserved businesses were prioritized, including a dedicated window for lending institutions with asset sizes less than $1 billion dollars.
* If the program is extended, SBA and Treasury told the Select Subcommittee they will continue to focus on ensuring that underserved communities can participate in the program.
