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“These companies have been neglected for almost a year,” House small business president Nydia Velázquez (DN.Y.) told POLITICO. “I am committed to working with the Biden administration to extend these benefits to as many of these Sole Proprietors as possible, not just those who submit new claims.”
According to data from the House Small Business Committee, more than 2.6 million sole proprietors, independent contractors and freelancers have already been approved for PPP loans.
The backlash is the latest in a string of controversies surrounding the SBA’s management of the program, which since its launch last April has distributed more than $ 662 billion in loans that can be canceled if companies maintain their payrolls. The SBA, a small federal agency that handled the PPP with the Treasury Department, has come under fire for its opaque decision-making and ever-changing rules governing the unprecedented economic lifeline.
“I’m in a black hole because it looks like they’re definitely going to forget about the people who have already applied,” said Jonathan Kolbe, a New Jersey-based freelance photographer who has received two PPP loans and will not be able to do so. increase them according to the new rules. “I am disappointed that the SBA is not taking care of this, to help people who have already played by the rules, signed the nominations and obtained their approval.”
Concerns about the treatment of sole proprietors, independent contractors and independent businesses – small employers including home cleaning and repair services – have hampered the PPP since the program’s inception. While other businesses have been able to calculate their eligibility for PPP loans based on labor costs, small businesses have been forced to apply for loans based on their bottom line, which deducts items like rent and utilities. .
A survey of members of the National Association of Self-Employed Workers in December and January found that 68% believed the federal government was not providing adequate financial support to small businesses through the P3. A separate survey released last month by advocacy group Small Business Majority found that more than one in three businesses that applied for a loan had not received the full amount requested, including nearly all black independent entrepreneurs surveyed.
Last week, the Biden administration announced it would revise the rules for sole proprietorships and self-employed workers after finding that these business owners were “structurally excluded” and had undergone changes, even though they were the majority of all businesses. According to new rules released by the SBA on Wednesday, companies will be able to calculate their loan amounts based on a larger measure – gross income, which would make it easier for them to qualify.
While this initially seemed like a huge political advantage, the SBA will limit its potential impact by not allowing companies to modify their existing PPP loans if they have already been approved for assistance. It is a break with a recent precedent. The SBA allowed farmers and ranchers to increase past PPP loans after Congress passed a law in December that allowed them to benefit from more funding.
The SBA argues that it does not have retroactive regulatory power that would allow it to increase past PPP loans. SBA spokesman Matthew Coleman said Congress gave him the power in December to retroactively revise the rules for farmers and ranchers.
Although the small businesses involved do not have an army of lobbyists, their advocates are starting to fight back.
“Diligent people should not be punished,” said Keith Hall, president and CEO of the National Association of Self-Employed Workers.
Some on Capitol Hill believe the SBA has the power to adjust loans. Lawmakers plan to delve into the reasons for the decision and whether legislation is needed to address it.
Small Business Senate Chairman Ben Cardin (D-Md.), Who plans to hold a PPP watch hearing this month, said “it’s a matter of fairness.”
“I am very interested in finding ways in which we can provide the same benefits to those who have already filed their claims,” he said. “I need to understand a little more fully the administrative challenges the SBA faced and why they couldn’t recommend doing it administratively.”
If the SBA is about politics and it’s up to Congress to step in, borrowers face a tight schedule. PPP loans will expire on March 31. So far, neither the White House nor the main Democrats are making a great effort to extend it.
Dennis Ammann, CEO of Peoples Bank in Mississippi, said: “It looks like the small businesses that needed the help the most are being penalized.”
“I’m so frustrated at the SBA if they stick with this advance policy,” Ammann said. “I don’t understand why the SBA wouldn’t allow lenders to help these smaller businesses. It just doesn’t make sense.”
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