Mnuchin: standalone PPP ‘easiest’ way to get more help to struggling small businesses
Amid a battle in Congress over new stimulus, Treasury Secretary Steve Mnuchin said passing a standalone bill to revamp the Paycheck Protection Program is the “easiest” option to get continued help to small businesses.
In the Secretary’s first appearance before the House Select Subcommittee on the Coronavirus Crisis on Tuesday, Mnuchin said during the hearing that “jobs and kids” were the most important area of focus for the next stimulus bill, and that on the jobs front, a repurposed standalone PPP bill would be the “easiest to pass”—a prospect that has garnered support on both sides of the aisle and would likely “pass with overwhelming support,” Mnuchin argued. The PPP expired on Aug. 8 with over $130 billion in unused funds after being extended by Congress.
Recent PPP proposals floated would largely include more targeted help to smaller businesses (with fewer employees) who are able to demonstrate a hit to revenue or profits owing to the pandemic (Mnuchin also singled out those in industries like hospitality, travel, and entertainment as “hit very, very hard”). Additionally, Rep. Nydia Velazquez emphasized during the hearing Tuesday that a new PPP bill would also need to prioritize minority-owned businesses that were hit the hardest and struggled to access previous rounds of the program.
Negotiations for a new round of stimulus thus far have been stalled in Congress as Democrats and Republicans have butted heads over the size of the package and various items to include. On Tuesday, Senate Republicans said they would vote on their own legislation next week that likely will include unemployment benefits and, notably, more PPP, CNBC reported last week.
Mnuchin said during the hearing that “more fiscal response is needed,” emphasizing that “the issue is not what is the topline, I think the issue is we need now support quickly—that’s what’s important to the American economy, and if we need more, we can come back,” he said.
However, Mnuchin reiterated his wish for Congress to “move along with standalone legislation,” singling out the PPP, although it’s unclear if a separate PPP bill would be passed outside of an overall stimulus package. Democrats have previously indicated they do not want to pass legislation on a “piecemeal” basis, House Speaker Nancy Pelosi said back in July.
Billions of dollars flagged for fraud and misuse
Yet the Secretary’s comments come on the same day House Democrats via the Select Subcommittee on the Coronavirus Crisis released a preliminary analysis suggesting that while PPP has helped millions of small businesses survive the crisis, the program has shown a “high risk for fraud, waste, and abuse,” in line with a report from government watchdog the Government Accountability Office (GAO) back in June.
The analysis found that among the 5.2 million loans approved through the program before it expired, over $1 billion went to companies with multiple loans, and an additional near $3 billion was “flagged” by the federal government’s System for Award Management (SAM) database and PPP loan-level data, the Subcommittee wrote Tuesday. The Subcommittee alleged the SBA has “refused to implement strong oversight mechanisms and instead has committed to audit only a tiny percentage of loans,” the Subcommittee wrote.
Also on Tuesday, House Republicans released a report calling the program a “resounding success” and claiming the PPP had “supported more than 51 million jobs across the country” with “minimal fraud.”
An SBA spokesperson told Fortune in a statement that “the loan forgiveness process currently underway seeks to address data inaccuracies and other matters. In addition, all loans are undergoing an automated review and all loans over $2 million will undergo a manual review. Furthermore, any loan may be selected for a manual eligibility or forgiveness review.”