Congresswoman Beatty Wants Improvements to Paycheck Protection Program
WASHINGTON, D.C.—U.S. Congresswoman Joyce Beatty (OH-03) sent a congressional letter to the U.S. Department of Treasury Secretary Steven Mnuchin and U.S. Small Business Administration (SBA) Administrator Jovita Carranza calling on both federal agencies to update existing public guidance and frequently asked questions (FAQs) on what qualifies as ‘payroll costs’ and documentation required to certify such costs for sole proprietors, partnerships and independent contractors.
Section 1102 of the Coronavirus Aid, Relief, and Economic Security (CARES) Act, H.R. 748, clearly states, “the term ‘payroll costs’ means the sum of payments for any compensation to or income of a sole proprietor or independent contractor that is a wage, commission, income, net earnings from self-employment or similar compensation.” Yet, even as currently written, there have been reports of otherwise eligible borrowers being denied economic assistance under the CARES Act’s Paycheck Protection Program (PPP) because of their operating status.
“I am hearing from lenders and borrowers that there is uncertainty and confusion in the marketplace with regard to how to calculate and the documentation required to certify payroll costs for Central Ohioans working at hair and nail salons, barber shops, and from gig to gig,” Beatty said. “However, I am more concerned with the fact that this lack of guidance and clarity is preventing otherwise eligible borrowers who have been severely harmed by the economic impacts of COVID-19 from receiving aid that is sorely needed.” She continued, “In order to better facilitate loans, I call on you to issue further guidance and additional public awareness materials on the Paycheck Protection Program to ensure we support all small business owners.”
The PPP is a loan designed to provide a direct incentive for small businesses to keep their workers on the payroll. As mandated by the CARES Act, SBA will forgive loans if all employees are kept on the payroll for eight weeks and the money is used for payroll, rent, mortgage interest, or utilities. Individuals can apply through any existing SBA 7(a) lender or through any federally insured depository institution, federally insured credit union, and Farm Credit System institution that is participating. Other financial institutions will be available to make these loans once they are approved and enrolled in the program.