Delays in granting PPP loans affect the contractor group

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A national group of contractors continues their battle to advance the process of the federal government considering applications for credit relief for the Paycheck Protection Program.

the Associate General Contractor of America sued the U.S. Small Business Administration in December and filed with the agency this month for the Freedom of Information Act on the program designed to help small businesses weather the pandemic and retain their employees. If 60% of the money is used for wages and benefits, the 1% two-year loans can be waived. Loans granted after June 5, 2020 have a term of five years.

However, AGC officials say the award process is taking too long and is being done in secret for PPP loans over $ 2 million.

“We have several anecdotal reports of $ 2 million loan waiver requests pending since last September, even August,” said AGC attorney Mike Kennedy. “So you’ve been pending for a long time.”

The litigation began over a questionnaire that the SBA had to fill out for forgiveness from PPP borrowers with a volume of over $ 2 million and also to determine whether they were even eligible for the loans. AGC said the nine-page “Loan Requirement Questionnaire” focuses only on borrowers’ current financial conditions and not those that implemented the loan program in March and later supplemented with the Covid relief passed by Congress in April. The program again received additional funding from Congress in December.

The initial PPP loan applications were designed to be simple to get quick relief for businesses. The application only required the company to operate through February 15, employ staff on whom it paid wage tax, and certify that “the uncertainty of current economic conditions required the loan application to support the day-to-day business of the eligible recipient power”.

In the months following the introduction of the program Fraud allegations surfaced and also that money went to big companies. The SBA began to crack down.

AGC says that at the time the program was launched, contractors and other businesses were facing possible future conditions similar to, or even worse, the Great Recession.

“The fact is, the vast majority of the people I spoke to applied in early April,” Kennedy says of the PPP loans. “And the truth is, nobody knew how the year would end. So we felt like SBA came in retrospect and tried to blame people for not having a 20/20 in hindsight. “

Since the complaint was filed, the SBA has published the questionnaire and added a frequently asked questions section to its website. The agency also gave the questionnaire a 60-day public comment period. But that’s where the AGC says the openness stopped.

“We’re sitting here today,” says Kennedy, “they’re still reviewing the comments they got on the form. And they haven’t made any public commitments to make changes to the form.”

Meanwhile, the lending process for loans over $ 2 million is dragging on. “That delay has become a growing problem,” he says. “We believe SBA should be transparent about how long it takes to process these applications, and it isn’t.”

The AGC’s May 10 FOIA inquiry is looking for details of the loans approved and the loans made to see if there are any differences in time and procedure for those under and over $ 2 million. It also asks for the forms required by borrowers about which loans have been approved and denied, including information on how to deal with the forgiveness ratings.

AGC also believes that the SBA has hired a private company to assist in any way with the process and would like to know the details of that company’s responsibilities and instructions.

The SBA has 20 days to respond to the request. If that fails, says Kennedy, the AGC is ready to continue fighting by filing an action in an administrative court and, if necessary, in a federal court.

Kennedy says the goal of the AGC is to ensure that the award process is based on the certifications the contractors received when the loan was originally applied for.

“Right now we don’t know what we don’t know about how they are handling this process,” he says. “And so I would say that our short-term goal is to achieve more transparency. If the SBA is convinced of its decisions, I don’t know why they would hesitate to disclose them.”

Brian Turmail, AGC vice president of public affairs and strategic initiatives, says the delayed lending has created uncertainty among contractors. “Our members should not be penalized for not having a time machine to travel with and see into the future when submitting applications for a program that is supposed to provide immediate assistance.”

The SBA did not respond to a request for comment.

PPP loan applications were accepted by the SBA through credit institutions until the program ran out of funds on May 4th. This also applies to secondary loans for certain companies that had received previous PPP loans. Forgiveness is also requested through the credit institutions. (For more details about the SBA program, click here.)

The SBA reports that as of May 16, it has approved 11.2 million loans totaling $ 788 billion. With 12%, the construction industry is the second most important recipient of PPP loans in 2021, behind accommodation and gastronomy with 15%.

In 2021, $ 266 billion worth of loans were approved, with the average loan size being $ 44,000.

Here is a breakdown of these loan amounts as provided on the SBA website:

US Small Business Administration

Here is a breakdown of the credit relief dates as provided on the SBA website:

PPP Lending SBA ChartUS Small Business Administration

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