24 state attorneys general urge changes to the PPP

State Issues State Attorney General Covid-19 Federal Issues Small Business Lending SBA

On May 6, twenty-four state attorneys general sent congressional leadership a letter urging changes to the Paycheck Protection Program (PPP) to ensure that funds are distributed fairly, equitably and efficiently. The letter asserts that while the PPP has helped many small businesses already by “rapidly inject[ing] the initial $349 billion in funding into our struggling economy,” larger, more “well-connected” companies were better able to take advantage of the process and the program “has suffered from a notable lack of transparency, technical savvy, and functionality.” Specifically, the letter argues that due to insufficient guidance to lenders, the first round of funding “left far too many small businesses empty handed.” In order to ensure any additional funding allocated to the program effectively supports small businesses, the letter requests certain issues be addressed by Congress, including, among other things, (i) prohibiting applications from publicly traded companies with access to alternative funding sources; (ii) ensuring lenders do not favor existing, larger, and more lucrative customers over other applicants; (iii) allocating a portion of future funding exclusively for minority-owned small businesses; (iv) improving communication and technical support; (v) adding flexibility to the loan forgiveness requirements to account for the variety of circumstances facing small businesses; and (vi) providing more direct guidance to lenders.