The Tennessee Bankers Association, of which First Community Bank of East Tennessee is a part, and 18 statewide business associations and economic development organizations, asked the U.S. Treasury and Small Business Administration to streamline the loan forgiveness process for small businesses that received loans through the Paycheck Protection Program.
In a letter to U.S. Treasury Secretary Steven Mnuchin and Small Business Administrator Jovita Carranza, the groups said the loan forgiveness process outlined in recent guidance is unnecessarily burdensome on Tennessee’s small businesses. They are concerned the loan forgiveness process will require even the smallest PPP borrowers to hire outside experts to realize the purpose of the program and receive forgiveness of their PPP loans. Additionally, the complexity could open up small businesses to unnecessary liability.
“Businesses will struggle to complete these applications in a timely manner because of this technical and burdensome process,” said Colin Barrett, president and CEO of the Tennessee Bankers Association. “It is in the best interest of Tennessee small business owners to make the loan forgiveness process easier and less technical for smaller borrowers, whose businesses are already at greatest risk because of COVID-19.”
The groups want a de minimis threshold of $250,000, under which borrowers with outstanding loans may receive 100% PPP loan forgiveness through completion of a “PPP-EZ form.” This form would acknowledge the businesses spent the majority of PPP funds as outlined in the guidance and consistent with their PPP application. Borrowers could still be asked to maintain documentation in the case of an SBA audit in future years.
Established by the CARES Act, the PPP is a loan program designed to provide a direct incentive for small businesses affected by the coronavirus pandemic to keep workers on their payrolls. SBA will forgive loans if the funds are used for payroll, rent, mortgage interest or utilities.
Through June 6, $8,771,375,365 in PPP loans were made to 86,647 Tennessee small businesses and self-employed individuals.
The following organizations joined TBA in calling for changes to the loan forgiveness process:
- American Council of Engineering Companies of Tennessee
- Chattanooga Area Chamber of Commerce
- Insurors of Tennessee
- Johnson City Chamber of Commerce
- Kingsport Chamber of Commerce
- Nashville Area Chamber of Commerce
- The Beverage Association of Tennessee
- Tennessee Association of Rescue Squads
- Tennessee Chamber of Commerce and Industry
- Tennessee Community Organizations
- Tennessee Farm Bureau
- Tennessee Farm Winegrowers Alliance
- Tennessee Forestry Association
- Tennessee Fuel & Convenience Store Association
- Tennessee Grocers and Convenience Store Association
- Tennessee Home Builders Association
- Tennessee Hospitality Association
- Tennessee Retail Association
“Simplifying the forgiveness application process for the smallest borrowers will provide additional relief to struggling small businesses by eliminating unnecessarily complicated paperwork or expending precious dollars on consultants in order to comply with the regulations,” Barrett said.
About Tennessee Bankers Association
The Tennessee Bankers Association is a not-for-profit organization representing Tennessee’s commercial banks and thrifts. The Association provides continuing education, develops and monitors state and federal legislative agendas, disseminates information on all facets of the financial services industry, and promotes the public image of financial institutions.