U.S. Senator Edward J. Markey (D-MA) joined Senators Marco Rubio (R-FL) and Ben Cardin (D-MD), Chairman and Ranking Member of the Senate Committee on Small Business and Entrepreneurship, on a bipartisan letter to Steven Mnuchin, Secretary of the U.S. Department of the Treasury, and Jovita Carranza, Administrator of the U.S. Small Business Administration (SBA), urging the agencies to provide an immediate administrative fix to ensure the continued operation of the 7(a) loan program.
Due to a technical drafting error, the CARES Act and the Paycheck Protection Program and Health Care Enhancement Act did not create separate authorization levels for the 7(a) program and the Paycheck Protection Program. As a result, the 7(a) program’s FY 2020 $30 billion lending authority will be voided until July 1, 2020 once the amount authorized for PPP is committed. That will leave numerous businesses seeking access to capital without access to the 7(a) loan program.
“The 7(a) program provides flexible capital to businesses that cannot obtain credit elsewhere, serving as a lifeline for many small businesses before this crisis, and fulfilling a vital role in this economic emergency,” the Senators wrote. “The high demand for PPP loans will lead to a swift expenditure of the new funds, given the severity of the crisis and need for small business relief. We urge the agencies to provide an immediate administrative fix to reserve part of the authorized amount for the 7(a) program.”
In addition to Chairman Rubio and Ranking Member Cardin, 20 Senators signed the letter: Lamar Alexander (R-TN), Marsha Blackburn (R-TN), Cory Booker (D-NJ), John Boozman (R-AR), Maria Cantwell (D-WA) Chris Coons (D-DE), Tammy Duckworth (D-IL), Michael Enzi (R-WY), Joni Ernst (R-IA), Deb Fischer (R-NE), Mazie Hirono (D-HI), Jim Inhofe (R-OK), Kelly Loeffler (R-GA), Mike Rounds (R-SD), Jim Risch (R-ID), Mitt Romney (R-UT), Jacky Rosen (D-NV), Jeanne Shaheen (D-NH), and Todd Young (R-IN).
The text of the letter is below.
Dear Secretary Mnuchin and Administrator Carranza:
The recently signed Paycheck Protection Program and Health Care Enhancement Act (H.R. 266) allowed for the assistance provided through the Paycheck Protection Program (PPP) to resume and continue saving millions of jobs throughout our country. Now, more than ever, America’s 30 million small businesses and the over 60 million individuals they employ, need access to the PPP. They also need access to the SBA’s existing core lending programs, such as the regular 7(a) Loan Guaranty program, to stay afloat through this unprecedented crisis.
The 7(a) program provides flexible capital to businesses that cannot obtain credit elsewhere, serving as a lifeline for many small businesses before this crisis, and fulfilling a vital role in this economic emergency. The PPP stands on the foundation of the 7(a) program, which has allowed PPP to become operational quickly. Unfortunately, the CARES Act did not establish separate authorization caps for PPP and the 7(a) program. The 7(a) program was able to continue to operate after the PPP program expended its appropriated funds because the programs did not reach the statutory lending authority. However, in the most recent bill passed to fund the PPP, the 7(a) program would be unable to continue operating since separate authorization caps were not established and the amount appropriated in H.R. 266 provides funding to commit the entire authorized amount to PPP loans, leaving no lending authority for 7(a). This lack of separate authorization caps, first in CARES, and carried through in H.R. 266, effectively voids the 7(a) loan program’s FY 2020 $30 billion authorization cap until July 1, 2020.
The high demand for PPP loans will lead to a swift expenditure of the new funds, given the severity of the crisis and need for small business relief. We urge the agencies to provide an immediate administrative fix to reserve part of the authorized amount for the 7(a) program. This will allow small businesses to access the capital they critically need for both SBA programs.
We thank you for your continued service on behalf of America’s small businesses. We look forward to our continued partnership to help small businesses survive this economic hardship.