CBA Letter - SBC Hearing on CARES Act Implementation

June 8, 2020


The Honorable Marco Rubio


Committee on Small Business & Entrepreneurship

U.S. Senate

428A Russell Senate Office Building

Washington, D.C. 20510


The Honorable Ben Cardin

Ranking Member

Committee on Small Business & Entrepreneurship

U.S. Senate

428A Russell Senate Office Building

Washington, D.C. 20510


Dear Chairman Rubio and Ranking Member Cardin:


On behalf of the Consumer Bankers Association (CBA), I would like to thank you for convening the Committee on Small Business & Entrepreneurship hearing on “Implementation of Title I of the CARES Act.” We appreciate the Committee’s continued oversight of the programs established under the CARES Act, specifically the Paycheck Protection Program (PPP). CBA is the voice of the retail banking industry, whose products and services provide access to credit for consumers and small businesses.


The PPP has been welcomed by small businesses across the country and considered a lifeline for the millions of men and women who work at them. Banks of all sizes across the country have worked tirelessly to implement and execute the new program, doing everything humanly possible to support U.S. small businesses and provide them assistance through the PPP. However, given the expedited process by which the program was implemented, there have been both considerable gaps in policy and lag in proper guidance resulting in uncertainty for small businesses and lenders alike. Nevertheless, CBA commends the work of Congress, the Department of Treasury, the Small Business Administration (SBA), and all the lenders across the country who together worked dutifully to make PPP a reality, helping over 4.5 million small businesses receive the support they need to endure through the COVID-19 pandemic.


The recent enactment of the Paycheck Protection Program Flexibility Act will provide more flexibility to small businesses and maximize their access to loan forgiveness. While the SBA and Treasury must implement the changes included in the law, these measures are a step forward to improving the PPP. As Congress and the agencies evaluate needed changes to the program that will enhance operability, CBA has identified several areas of concern for lenders and small businesses that need to be addressed: 


  1. Automatic Forgiveness for the Smallest of Small Businesses

The SBA and Treasury recently released guidance outlining the forgiveness process for small businesses and lenders, including two Interim Final Rules (IFR) and a borrower forgiveness application. It was apparent, based on the complexity of the application and guidance, that the forgiveness process will be unnecessarily burdensome for many businesses, particularly the smallest of small businesses that do not have the administrative support needed to complete the form. In order to help these businesses, CBA urges Congress to quickly pass legislation that would forgive PPP loans of less than $150,000.  This threshold would account for 85 percent of total PPP recipients, but less than 26 percent of PPP loan dollars. Lenders would continue to meet the PPP requirements provided by SBA for these loans, but the loan forgiveness process would be faster for these small businesses. Further, these hard-hit businesses could save more than $7 billion dollars and hours of paperwork.  Small businesses and their employees are the backbone of our nation’s economy and communities. Their time and resources would be better focused on getting the economy safely back up and running, not processing overly complicated documentation that was not required by legislation and released late in the PPP loan process


  1. Strengthening Lender Hold Harmless

CBA supports language strengthening the “Hold Harmless” provision originally in the CARES Act. Banks across the country readily answered the call to participate in PPP to ensure small businesses and their employees would receive needed support in these unprecedented times, all without the essential guidance and rule makings required by any loan program. In order to adequately protect lenders who stepped up and participated in PPP, Congress should extend liability protection provided in the Hold Harmless provision to the entirety of the PPP loan process and not just the forgiveness aspect. An interim final rule issued by SBA indicated that small businesses are solely responsible for certifying their loan forgiveness amount, and a lender may rely on a borrower’s certification without the need for verification. Similarly, as prescribed in the “Hold Harmless” provision in Section 1102 of the CARES Act, the law allows lenders to depend on borrower attestations. Any adjustments to the hold harmless language must remain consistent but be applied to cover the entirety of the loan process.


  1. Clarifying Guidance on Agent Fees

The SBA and Treasury has yet to issue guidance clarifying the treatment of third-party agent fees in the PPP process. Specifically, lenders need verification that borrowers independently retained or used an agent to assist in preparing an application are responsible for supplying the SBA Form 159. Our members believe it is reasonable for a lender to be obligated to pay an agent only if the lender retained the agent to assist the lender in preparing or sourcing PPP loans or authorized the customer to retain the agent at the lender’s expense, but verification of the service is needed.


Thank you again for your decisive actions and leadership during this time.  We remain eager to work with Congress, the Department of Treasury, and SBA to help small businesses in these uncertain economic times.



Richard Hunt

President and CEO