Several Democratic senators want updated guidance from the Treasury Department and Small Business Administration after a rocky rollout of the loan program meant to keep small businesses afloat during the coronavirus pandemic.
On Monday, Sen. Bob Menendez (D-NJ) sent a letter to Treasury Secretary Steve Mnuchin and SBA Administrator Jovita Carranza — urging them to release new guidance and strengthen SBA’s systems.
“Many small businesses will not survive without immediate help and any delay in distributing PPP aid will be catastrophic for small businesses at this critical moment,” wrote Menendez.
The Paycheck Protection Program (PPP), part of the CARES Act, is designed to provide loans to small businesses struggling because of the coronavirus. Businesses must have fewer than 500 employees to qualify. The loans will be forgiven if employers use the money for certain expenses, such as keeping workers on the payroll.
The SBA’s loan processing platform reportedly crashed on Monday, preventing lenders from processing loans. This comes after most banks weren’t prepared to handle the influx of loan applications when the program opened on Friday. The Treasury Department did not give financial institutions final guidance on the program until hours before it was supposed to launch. Some of the nation’s biggest lenders said they weren’t ready to start processing the applications on Friday.
“The issues small businesses and lenders experienced during Friday’s application launch strongly suggests that Treasury and SBA need to provide clear and updated guidelines and additional assistance to lenders and borrowers during the application process, including ensuring SBA’s systems have enough capacity to process loans and approve new lenders,” Menendez said in the letter.
Sen. Elizabeth Warren (D-MA) and Sen. Ed Markey (D-MA) wrote a similar letter to Mnuchin and Carranza on Monday, demanding they take “whatever steps are necessary to fix the existing operational and technological problems with the system.”
“This program is vital to the survival of the millions of small businesses that form the backbone of our economy, and I am concerned that you have been unable to quickly set up the PPP so that these businesses can receive this funding in an expedient and fair manner,” said the senators from Massachusetts.
“Small businesses form the backbone of our economy, and they cannot afford for a bungled rollout of this badly need $349 billion in aid,” they added.
National Economic Council Director Larry Kudlow told reporters there were commitments for 130,000 loans — worth $38 billion — from 2,400 lenders, as of Monday morning.
Yahoo Finance reached out to the Treasury Department and the Small Business Association but did not immediately hear back.
Jessica Smith is a reporter for Yahoo Finance based in Washington, D.C. Follow her on Twitter at @JessicaASmith8.
Read more:
Sen. Warren calls on food delivery apps to reclassify workers, increase pay during pandemic
Survey: CEO confidence tanks, likely worst drop since the financial crisis
Sen. Durbin says Senate should consider working, voting remotely
U.S. Chamber pushes for payroll tax cut, emergency loans to keep businesses afloat