On March 17, the U.S. Senate Committee on Small Business & Entrepreneurship held a hearing entitled “The Paycheck Protection Program: Performance, Impact, and Next Steps.” OFN President and CEO Lisa Mensah was invited to testify about CDFI participation in the program and future recommendations for the U.S. Small Business Administration (SBA).
In her testimony, Mensah explained the role of CDFIs in reaching underserved businesses, praised Congress and the SBA for the beneficial programmatic changes they have already made, and encouraged the committee to review all SBA programs from top to bottom to prioritize the needs of the most underserved small businesses and their lenders, CDFIs.
The hearing focused on recent changes made to the Paycheck Protection Program (PPP) by both Congress and the Biden Administration to target assistance to the smallest and most underserved businesses. These changes included a dedicated two-week application period in early March for businesses with fewer than 20 employees, a set aside for Community Financial Institutions, simplification of the forgiveness process, and changes for Schedule C filers, among many others.
Although these changes have benefitted small businesses, Mensah told the committee that there was more work to be done. The Schedule C income calculations were not made retroactive and do not allow businesses to reapply if the new regulations would allow them to qualify for a larger loan. Additionally, CDFIs and their borrowers need more time. The Paycheck Protection Program is currently set to expire on March 31.
OFN strongly supports the PPP Extension Act of 2021, which extends the program until May 31 and provides an additional 30-day period for the SBA to process pending applications. The House has already passed the bill, but the Senate has yet to act.
Finally, Mensah encouraged the committee to look beyond the immediate crisis:
"I see PPP as critical emergency relief. Yet for the American economy to rebound and flourish, small businesses need more than PPP. They need responsible loans, credit enhancements, and working capital…Right now, Congress can take steps to build a stronger and more inclusive economy for the long term. CDFIs are pivotal to this work and I urge Congress to invest in the institutions that are here on the ground in our rural, urban, and Native communities.”
Watch a recording of the hearing.