Small Business Loan Program Administrators Face Questioning from Congress
Small Business Administrator Jovia Carranza and Treasury Secretary Steven Mnuchin are scheduled to face questions from Congress on Wednesday, according to the Wall Street Journal.
This is Ms. Carranza's first time in front of Congress since the Small Business Administration was tasked with distributing billions in aid for small businesses suffering at the hands of the pandemic. Treasury Secretary Steven Mnuchin is participating in a hearing convened by the Senate Small Business Committee on the Paycheck Protection Program.
Ms. Carranza rarely makes public appearances whereas Mr. Mnucihin is seen frequently. There have been rumors that the Treasury Department has been the main force in key decisions. However, a Treasury Department spokeswoman denied that stating that the program “involves a constant, dynamic discussion and coordination” between the two agencies.
Both administrators are expected to receive questions regarding loan forgiveness. Last week, Congress pushed to ease the process of converting a loan to a grant by lowering the percentage of funds that must be spent on payroll and tripping the time frame for borrowers to spend the funds. Last month, the Small Business Administration released an 11 page forgiveness application for borrowers.
Congress might also bring up problems with implementing the problem in its earliest stages. Banks overwhelmed with applications tended to focus on existing clients despite guidance from agencies to follow a first-come, first-serve model. This led to issues for community lenders and others who were unable to secure funding in the earliest days of the program.
In addition, the agencies have not disclosed the names of borrowers that received funding. Lawmakers are expected to question how companies such as the Los Angeles Lakers, Ruth's Hospitality Group Inc, and others who should not have qualified were able to receive PPP funds while small businesses waited in line.
Senator Jeanne Shaheen said the program “has gotten help out to a lot of small businesses that are really struggling,” but wants more information from the SBA. “The administration has implemented it without providing any feedback as to what’s working and what’s not,” she said. “It would be nice to actually see the data so we can respond.”
Administration officials will most likely highlight the positive effects of the program such as a decreasing unemployment rate.