Letter to the Hon. Marco Rubio, the Hon. Ben Cardin, the Hon. Nydia Velazquez, and the Hon. Steve Chabot - Looking Toward Next Coronavirus Package, Rosen, Cortez Masto, Lee Lead Bicameral Letters to Provide Nevada Small Businesses Increased Access to SBA Loans

Letter

Dear Chairman Rubio, Chairwoman Velázquez, Ranking Member Cardin, and Ranking Member
Chabot:
As you move toward a fourth coronavirus stimulus package, we ask that you take a more
prescriptive approach that provides the U.S. Small Business Administration (SBA) in statute
with more detailed guidelines on how it must administer small business relief programs such as
the Paycheck Protection Program (PPP) and the Economic Injury Disaster Loan (EIDL)
program. Lacking firm guardrails and with broad discretion to act as it sees fit, SBA has
interpreted language in the Coronavirus Aid, Relief, and Economic Security (CARES)
Act regarding PPP in a manner that has excluded many small businesses from receiving relief,
and we urge you to rectify this for that critically important program and others in any
forthcoming legislation.
The CARES Act represented an unprecedented bipartisan effort to address the ongoing COVID19 public health crisis and resulting economic downturn. Republicans and Democrats came
together to provide relief to working families, seniors, frontline healthcare workers, small
businesses, and other members of our communities. With a 96-0 vote in the Senate and a
resounding voice vote in the House of Representatives, Members of Congress put aside partisan
differences in order to try to save the nation from a global pandemic and stave off economic
catastrophe. The President followed suit by signing the landmark bill into law.
While much more work needs to be done to add to this important legislation, including additional
funding for our small businesses and more direct support for workers, the Administration's
implementation of the CARES Act unfortunately has limited the law's potential effectiveness. In
particular, the Paycheck Protection Program, designed to provide loans to small businesses who
need to meet payroll obligations and want to keep workers employed, has been plagued with
challenges. Too many of these errors have been unforced, with the U.S. Small Business
Administration and the U.S. Treasury Department either willfully ignoring Congressional intent
or taking extreme license with the authority provided by the CARES Act. In doing so, countless
small businesses and non-profit organizations have been shut out of PPP.
For example, while small businesses in the gaming industry support more than 350,000 jobs in
the United States, guidance released by the U.S. Small Business Administration and the U.S.
Department of Treasury several weeks ago excluded any small business that derives more than
one-third of their revenue from legal gaming activities from participation in PPP. This is despite
the fact that, in Section 1102 of the CARES Act, the legislation explicitly states that "in addition
to small business concerns, any business concern, nonprofit organization, veterans organization,
or Tribal business concern described in section 31(b)(2)(C) shall be eligible to receive a covered
loan" if the business has 500 or fewer employees. SBA's incorrect interpretation of this clear line
of statutory text has cut out not only commercial gaming businesses, hotel casinos, and Tribal
gaming operations, but also restaurants, bars, grocery stores, and convenience stores that operate
gaming equipment and derive revenue from it, along with gaming manufacturers and related
businesses. After hearing from Members of Congress from states with legal gaming, SBA
amended its guidance this week to raise the exclusion threshold to those entities deriving more
than half of their revenue from gaming, with a $1 million overall cap on annual gaming revenue.
While this is a step in the right direction, all small businesses should have access to CARES Act
loan programs, and we should not be giving SBA license to exclude anyone.
There are likewise numerous other small businesses and non-profit organizations that lack access
to relief, including small businesses that do not have pre-existing lending relationships with
banks taking part in PPP and -- until recently -- religiously affiliated non-profit organizations and
farms. Under pressure to comply with Congressional intent, SBA reversed course on religious
non-profits and farms, finally allowing them to receive support and pay their workers. We
applaud Administrator Carranza and SBA for taking this important step. However, this should
serve as a lesson that Congress must not leave such decisions for SBA's interpretation, but
should rather take a more prescriptive approach when updating the contours of PPP and any
future programs and what they require of SBA in order to provide relief to our small business
communities.
With this in mind, we ask you to take steps to explicitly ensure that all legally-operating small
businesses and non-profit organizations that Congress has permitted to access COVID-19 small
business relief have full access to PPP, EIDL, and any other COVID-19 small business relief
programs by prohibiting SBA from directly or indirectly barring businesses from participating in
the program solely because of their involvement in a particular industry, their lack of history of a
lending relationship with a particular financial institution, or any other arbitrary criteria that
would limit access to capital.
Thank you for your attention to this important issue. We look forward to working with you on
finding a solution.