Steven T. Mnuchin, Secretary, Department of the Treasury at the Senate Committee on Banking, Housing and Urban Affairs hearing reviewing the CARES Act Quarterly Report to Congress, in Washington, DC, U.S. September 24, 2020.

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One of the main draws of the paycheck protection program was the ability to cancel loans if the money was used as the law permitted – with 60% of the capital going to payroll and 40% to payroll. other authorized expenses. But as the pardon opened last month, some banks and small businesses are reporting difficulty navigating the process, and advocates are pushing for simplicity for already struggling businesses.

According to the Consumer Bankers Association, banks estimate that up to 80% of rebate requests submitted by small businesses require additional follow-ups to reconcile errors or find missing information. The EZ form, which allows companies that meet certain qualifications to apply through a streamlined process, is not as easy as advertised, CEO Richard Hunt said.

“A lot of them are not simple problems to solve, requiring an average of four to five communications between the small business and the bank to resolve the problem. The SBA EZ form is just not easy for the overwhelming majority of small business owners and still requires the completion of some complicated calculations, ”Hunt said in a statement.

A recent report from the Government Accountability Office found that questions remain about the forgiveness process, noting that the Small Business Administration has issued rules and guidance on an “ongoing basis.” The report adds that “requesting a loan forgiveness takes longer than requesting the PPP loan itself.” The CBA, along with the International Franchise Association, have asked the Treasury Department and the SBA that all rules and guidelines for the next wave of PPP improvements be finalized before they go into effect.

The SBA did not immediately respond to a request for comment.

More than 100 business groups have called on Congress to pass legislation streamlining the forgiveness process for loans under $ 150,000, which make up the vast majority of P3 loans. Asked about potential legislative changes to the pardon process during a Senate Banking Committee hearing on Thursday, Treasury Secretary Steven Mnuchin told lawmakers there was bipartisan support to move beyond the EZ form created for businesses, but added that businesses shouldn’t wait for legislation to go ahead with enforcement.

“We think we need additional legislation to simplify beyond what we have done. We want to maintain fraud protection,” Mnuchin said. He added that he would encourage borrowers who have received loans of less than $ 150,000 to “act quickly and… not wait for the legislation. But if we could get legislation that would be great ”.

Data from the National Federation of Independent Business released last month found borrowers were waiting for lenders to start accepting loan forgiveness requests, and the group’s report states that “many small business owners still find the EZ form complicated and confusing.” The group found that 43% of members surveyed planned to use the EZ form and 62% were unsure which forgiveness form they should use.

And some find that even if they want to ask for forgiveness, they are not immediately able to do so. Paul without a hood, owner of Rose Dry Cleaners in San Antonio, Texas, said he was anxious to see if loans were canceled below the $ 150,000 threshold, adding that his bank was not ready to accept his cancellation request at the end of the last month.

“We immediately filled out all of our papers and went to hand them over for forgiveness, but they were not accepting the forgiveness papers as there seems to be an anticipation that there will be changes going on going on”, a- he declared. “Potentially, since ours is considered small, it is likely to fall under a category of less than $ 150,000 for full forgiveness.”

Karen Kerrigan, chair of the Small Business & Entrepreneurship Council, said banks and businesses are waiting for more clarity and potential changes to the process.

“Small business owners are keeping an eye out for additional P3 changes and maybe more tips, including simplifying forgiveness, and many have been told to wait a bit longer – this of course created some anxiety, ”Kerrigan said. “Banks also expect clarity, certainty and reassurance. Why devote significant resources to setting up a rebate system when there may be a legislative or regulatory change that allows for a less bureaucratic and costly rebate system? “


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