SBA Frustrations Intensify

SBA Frustrations Intensify

( – Small business owners and lawmakers are frustrated with the Small Business Administration (SBA). The issues stem from the SBA’s efforts to appropriately disburse their share of the Paycheck Protection Program (PPP) as part of the $2-trillion aid package passed in March. Unfortunately, that’s not all of the frustration. There are concerns growing over the lack of guidance from the SBA and how it hasn’t followed the provisions of the law.

The SBA is small in comparison to other federal agencies. A staff of 4,000 has had to oversee the fast implementation of the CARES Act. The SBA says it has approved 252,340 disaster loans totaling almost $25 billion as of May 17. There are also 5.4 million disaster loan applications still pending. That’s 50 times their normal yearly volume in just one month.

In April, Congress authorized $350 billion for PPP. Within days, the fund was depleted due to high demand. A few weeks later, Congress reauthorized a replenishment of another $310 billion. Demand has not been as strong since mid-April as small business owners have expressed concerns about conditions that need to be met for loan forgiveness.

SBA Makes Its Own Rules

On April 24, the SBA’s inspector general (IG) submitted a report and found that the SBA was not always in compliance with the Paycheck Protection Act. In some instances, it made its own rules in addition to the law.

The IG said that, while the law required the SBA to give guidance to lenders about underserved and rural markets, the agency failed to do so. The report also discovered the SBA issued rules requiring borrowers to use 75% of the funding on payroll costs to receive loan forgiveness. Yet, the CARES Act made no such mandate. Many small business owners objected to this requirement and say they need the money to help with rent, utilities, and other costs.

In addition to the PPP, the SBA also is responsible for the Economic Injury Disaster Loan program. It has also been a source of complaints. Across the country, small business owners have said they can’t get updates from the SBA. In some instances, call wait times were over four hours.

Lawmakers Frustrated

By the end of April, lawmakers were expressing concerns over how the SBA was executing the law. They discovered large, publicly-traded businesses were receiving money at the expense of small businesses it was intended to help. This was not the intention of these programs.

It’s not just one side of the aisle that is growing frustrated. Sen. Marco Rubio (R-FL) has tried numerous times to get SBA officials to appear before the Senate Small Business Committee. Since March, Sen. Chuck Schumer (D-NY) sent eight letters to SBA Administrator Jovita Carranza. He has heard nothing back from her.

On Tuesday, Treasury Secretary Steven Mnuchin acknowledged the problems during a congressional hearing. He said the SBA was working on “rebuilding the entire system” to manage the volume of disaster loans. Mnuchin mentioned the SBA has also been adding staff and operations capabilities to solve the problem.

While the SBA struggles to get its act together, small business owners are being forced to make big decisions about their employees and whether or not they can reopen when the pandemic ends.

~Here’s to Your Prosperity!

Copyright 2020,