By Dan McDermott
Florida Republican Senator Marco Rubio took to Twitter Saturday, April 4, 2020 to address a flurry of frustration (NSFW) expressed by small businesses trying to apply for emergency loans to stay afloat during the economic meltdown imposed by federal, state and local governments responding to the COVID-19 virus.
Rubio said that the Small Business Administration (SBA) interim rule for the new Paycheck Protection Program (PPP) loans exempts lenders from anti-money laundering requirements only for loans to their existing customers. This makes it difficult for small businesses — like many Bank of America customers — who were quickly turned down by their own banks.
Online lenders including PayPal will be offering loans “as early as next week,” Rubio said. Quickbooks Online customers recently received an email saying they would be offering the loans.
Another problem is that the interim rule requires lenders to hold loans for 7 weeks before they can be purchased, Rubio said. A purchase mechanism for the US Treasury or the Federal Reserve will need to be implemented as soon as possible for community banks and tech companies to be able to offer PPP loans.
Rubio said he expects further clarity next week on SBA affiliation rules for small businesses and 501(c)(3) non-profits and also on general eligibility requirements for the PPP loans.
Another area where clarification is needed, Rubio said, is whether small businesses can include in their payroll cost calculation payments to independent contractors who receive a 1099 and are not employees.
In calculating the average monthly payroll, Rubio said, “we need the SBA to make clear our intent when writing the bill that gross payroll would be applied to the calculation to ensure federal tax withholding & FICA burden isn’t on small businesses.”
Rubio said that the SBA has contracted with Amazon Web Services to improve the speed of the electronic transfer system used to send the loan applications. He said the SBA has also promised to address issues community banks have had accessing the portal for non-SBA lenders who are participating in the PPP program.
Rubio said the program should receive more funding. “Based on the demand we saw on day one it is clear we will need more money for PPP by late May. Our rough estimate is that if two-thirds of the lenders aren’t up and running yet, the $349 billion will run out around June 6, 2020,” he said.
Rubio said that by 6:06 pm Friday, April 3, 2020, “13,669 small business owners received PPP loans valued at $4.3 billion.”