Democrats push for simpler loan-forgiveness process in small business coronavirus bailout


U.S. Secretary of the Treasury Steven Mnuchin testifies with Jovita Carranza, Administrator U.S. Small Business Administration during the Senate Small Business and Entrepreneurship Hearings to examine implementation of Title I of the CARES Act on Capitol Hill on June 10, 2020 in Washington, DC.

Kevin Dietsch | Getty Images

Senate Democrats want Treasury Secretary Steven Mnuchin and Small Business Administration head Jovita Carranza to simplify the process of applying for loan forgiveness as part of the Paycheck Protection Program. 

The senators urged a number of changes, including the creation of an easy-to-use form for smaller loans, a well-staffed hotline to offer help for those applying to the program, and a “suite” of online tools designed to help applicants. The senators also want the Treasury Department to issue guidance around safe harbor protection for lenders to borrowers requesting smaller loans.

“As the program enters its next phase and borrowers begin to seek forgiveness of their loans, there is an immediate need for significant improvements to the forgiveness application process, which is tremendously cumbersome and overly complex, especially for very small businesses, sole proprietors, and underserved borrowers,” wrote Senate Minority Leader Chuck Schumer, D-N.Y., and Sen. Ben Cardin, D-Md., to Mnuchin and Carranza. The letter was signed by all 47 Senate Democrats and independents who caucus with Democrats. It was delivered Friday.  

The senators expressed concern that the current form, which is 11 pages long, “is especially burdensome, time-consuming, and costly for very small and underserved businesses, including microbusinesses, sole proprietorships, rural, and minority-owned small businesses.” They worried those businesses “will feel compelled to hire accountants and attorneys to complete the forgiveness form in a manner that provides comfort that the loans will be forgiven.”

The program was initially rolled out in April, offering $349 billion to small businesses forced to shutter or curtail operations as the coronavirus spread. After those funds quickly ran out, the government replenished the program with an additional $310 billion. It offered companies forgivable loans provided a company maintains its employee compensation. 

The loan was originally offered for eight weeks but was later extended to 24 weeks, along with other changes to the program that relaxed its guidelines

Since the coronavirus pandemic began, more than 44 million workers have filed for unemployment. 

As of early June, more than $120 billion of the additional $310 billion allotted to the program had yet to be used, sparking concern its design may be insufficient for the businesses it is intended for. The program has also gone through several rounds of guidance, causing some critics to deem it too confusing or daunting for prospective applicants.  

The senators also urged that Treasury include a section in an updated, streamlined loan forgiveness form to collect data, including demographic information, to ensure that minority owners had sufficient access to the funds.

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