Letter to Steve Mnuchin, Department of the Treasury Secretary, and Jovita Carranza, Small Business Administration Administrator - Congressmen Neguse and Crow Lead Colorado Delegation Letter Calling for Regulatory Flexibility for Veteran Service Organizations

Letter

Dear Secretary Mnuchin and Administrator Carranza:

Thank you for your continuing efforts to implement the small business relief programs provided
in the Coronavirus Aid, Relief, and Economic Security (CARES) Act and the Paycheck
Protection Program and Health Care Enhancement Act. We write to bring your attention to the
challenges facing Veterans Service Organizations (VSOs) and ask that you provide
the regulatory flexibility needed so that non-profits, to include VSOs, are able in the best
position to continue serving their communities during this crisis and after it subsides.

For over a century, VSOs have provided a unique and essential service to thousands of Veterans,
military personnel, their families and communities. In several locations, Posts serve as the
lifeblood of their surrounding community, offering social and community service programs and
assisting veterans and their dependents in obtaining the benefits they rightfully deserve.

The economic survival of VSOs is critical to our nation's rich veteran community. Without these
Posts, veterans and their families will lose out on benefits assistance, career and job training
events, financial services, volunteer opportunities, mentoring, and much more. In order to ensure
VSOs can continue serving their communities, we respectfully request you provide the necessary
flexibility and remove the payroll threshold for PPP loan forgiveness specifically for VSOs,
allowing these organization to use other expenses instead of payroll costs to compute the
maximum loan amount. This will enable these critical organizations to address their high fixed
costs, support their small number of employees, and better protect long-term viability.

Additionally, once VSOs receive PPP funds, there are issues with the current requirements for
how funds must be used to make them forgivable. As you know, Section 1106 of the CARES
Act allows for loan forgiveness, a critical aspect of the Paycheck Protection Program (PPP) for
America's struggling small businesses and tax-exempt organizations, including 501(c)(3) and
501(c)(19) organizations. While the CARES Act laid out four allowable uses of PPP loans --
payroll, mortgage or rent payments, and utility costs -- it did not stipulate a fixed allocation of
funds among those four uses. However, the Small Business Administration's Interim Final Rule
requires that 75% of PPP funds be used on payroll costs. We appreciate the policy goal behind
this regulation, but it poses a particular challenge for organizations relying on volunteers
with only a small number of employees, like VSOs. These organizations are essentially shut out
of realizing full loan forgiveness, and therefore are at greater risk of having to close their
doors. We request flexibility on this policy to support organizations like VSOs with their high
fixed costs.

Thank you for your consideration of this request. We look forward to working with you to
provide the necessary flexibility to VSOs across the country.