The following is a press release from the Massachusetts Attorney General’s office submitted to SOURCE media.
BOSTON – Massachusetts Attorney General Maura Healey last week submitted comments to the Small Business Administration (SBA) calling for changes in the rules for the Paycheck Protection Program (PPP), including more guidance, greater clarity, and enhanced fairness for small businesses.
“The Paycheck Protection Program is an important way to support our struggling small businesses,” said Healey. “We are urging the SBA to implement immediate changes to the PPP to make sure the process is fair and our small businesses and their workers get the relief they desperately need.”
As part of the CARES Act and follow-up legislation, the federal government has dedicated over $600 billion to the PPP, which was created to provide small business loans that pay employee salaries, certain amounts of rent and other approved business expenses. If the borrowers spend the money in line with program rules, they may also qualify for loan forgiveness. However, the program has struggled to get money to the most vulnerable small businesses.
Healey sent comments to the SBA, referencing a letter that Massachusetts, leading a coalition of 24 attorneys general, recently sent to Congressional leadership expressing concerns that the PPP, while helping numerous small businesses and their employees, suffers from a lack of transparency, technical savvy, and functionality that has led to funds being distributed in a manner overly benefitting large, well-connected companies and left many small businesses underserved.
Healey also called on the SBA to increase fair access funding for small businesses, equitable distribution of program funds to minority-owned small businesses and across metropolitan areas, as well as improved communication, transparency, reporting, and technical support.
The AG’s Office also submitted comments to the SBA on its Third Interim Final Rule, a new set of standards issued regarding PPP applications from sole proprietorships, partnerships, and businesses owned by directors of banks processing the applications, AG Healey demanded that the SBA provide clearer guidance to ensure that PPP money goes to the small businesses the program was designed to aid.
The letter recommends that the program put in place stronger safeguards to ensure that partnerships generating ample profit do not obtain PPP loan forgiveness. The letter also asks the SBA to limit the ability of highly compensated sole proprietors to benefit from the PPP and asks the SBA to undertake a review and determine how frequently applicants obtained funds when they already had more than sufficient resources available to them.
In addition, the AG’s Office asks for clearer guidance that various expenses, such as commercial auto insurance premiums, are covered by the PPP, and that businesses run by bank directors be barred in routine circumstances from seeking PPP loans through those connected lenders in order to avoid the appearance of impropriety.
AG Healey also called for the SBA to further lower the interest rate on program loans to small businesses, provide clearer guidance on application options, and ensure that all small businesses are given access to the program on a first come, first served basis. The AG’s Office noted how there is insufficient guidance on the loan forgiveness process, and urged the SBA to issue such guidance promptly.
These matters were handled by the AG Healey’s Insurance and Financial Services Division.