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Over the last few months, the outbreak of COVID-19 has led to an unprecedented public health crisis. Congress took swift steps to address both, but today we will be focusing on the Paycheck Protection Program – created by the CARES Act.

The Paycheck Protection Program is a sub-program of the 7(a) loan guarantee program, and began with almost $350 billion for fully guaranteed, forgivable loans designed to meet payroll costs and other business expenses.

The goal of the program is to save as many small business jobs as possible, as quickly as possible. To do so, SBA stood up the program within a week and has guaranteed over 15 times as many loans than it did in the entire 2019 Fiscal Year – all this in just a few short weeks.

We appreciate all the hard work by everyone at SBA and are equally grateful to the lending partners who participated in PPP for helping small businesses stay afloat during these uncertain times.However, given the size and scope of PPP, and the speed with which it was stood up, implementation was bound to be less than perfect.

As Members of the Small Business Committee, we are tasked with assessing areas for improvement in all of SBA’s programs, and the first round of Paycheck Protection Program funding exposed some of those areas.

For example, too many Main Street mom-and-pop shops were forced to sit on the sidelines as the program was first rolled out while larger, better capitalized businesses received loans.

All they were left with was the hope that Congress would add more money to the program.

Eventually, Congress did. And on April 24th, the Paycheck Protection Program and Health Care Enhancement Act was signed into law, providing an additional $310 billion in Paycheck Protection Program funding.

Importantly, the additional funding included a set-aside of $60 billion for small banks and credit unions, as well as CDFIs, MDIs, CDCs, and SBA Microloan Intermediaries, with the intent of funneling a greater portion of PPP funds to underserved business communities who struggled to access affordable capital.

This second round of funding has not drawn down as fast as the first, in part – I suspect – because of the lack of clear guidance with the forgiveness rules in the first several weeks of the program.

There were also a number of regulatory decisions made by SBA and Treasury in the early weeks of the program that may have limited the appeal of the loans to some prospective borrowers. For example, the agencies added a resources test to the program, and established a rule that required borrowers to spend 75 percent of proceeds on payroll costs in order to be eligible for full forgiveness.

This rule greatly restricted the ability of many different kinds of small businesses to spend their loan funds as needed and made the PPP product much less appealing for borrowers.

Agency rules like these forced us to act yet again. And on June 5, the Paycheck Protection Program Flexibility Act was signed into law.  The Flexibility Act extended the covered period to use the loan from 8 weeks to 24 weeks and up until December 31. It also permitted borrowers to spend a greater portion of their loans on non-payroll costs and remain eligible for forgiveness.

That makes today’s forum a timely one, as we will be able to hear from stakeholders about what’s worked with the program, what hasn’t, and how Congress can keep optimizing it as our local economies slowly begin to re-open.

As the program enters the forgiveness phase, we must analyze the issues borrowers and lenders are currently facing.

The primary concern we’ve heard is a needlessly long and complex forgiveness application, which according to experts reads more like a tax form than a loan application.  If loan forgiveness is the key feature of the program, applying for it should be as easy as possible.

We’ve also heard that minority-owned small businesses, micro-businesses and sole proprietors, continue to struggle with accessing PPP loans, despite about $130 billion remaining in the program account.

And just last week, Secretary Mnuchin testified before our Senate counterparts that Treasury will not be publishing detailed loan information for PPP, robbing Congress and the public of the data we need to evaluate the program.

So, I look forward to hearing from our distinguished panelists today about how Congress can keep improving the Paycheck Protection Program, and whether Congress should consider further fixes before the second round of PPP funding expires, or the program closes on June 30.