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AG Frey Joins Multistate Coalition Urging Congress to Strengthen Paycheck Protection Program
May 6, 2020
AUGUSTA - Attorney General Aaron M. Frey today announced that he has joined a coalition of 24 state attorneys general in calling for key changes to the Paycheck Protection Program (PPP) to ensure that funds are distributed fairly and equitably.
In a letter to Congressional leadership, the coalition of attorneys general express concerns that the program, while helping some small businesses and their employees, suffered from a lack of transparency, technical savvy, and functionality that led to funds being distributed in a manner overly benefitting large, well connected companies. As a result, the AGs argue that both the first and second rounds of funding with this program have left many small businesses across the country underserved by PPP.
"Small businesses are the backbone of Maine's economy, and they have been doing the right thing in following the advice of public health experts, often at an enormous financial cost," said Frey. It is important that aid to small businesses through the PPP is distributed fairly, transparently, and with appropriate flexibility and technical assistance in order to maximize its support of the businesses which are impacted.
The coalition is calling for Congress to adopt the following measures before they allocate additional PPP funding:
Increasing Fair Access Funding for Small Businesses: The AGs call for Congress to require the Small Business Administration (SBA) to provide stronger, explicit guidance to lenders ensure that funding goes to small businesses and not large, publicly traded companies. Additionally, the coalition urges Congress to adopt rules that prohibit lenders from giving preference to certain categories of customers over others, such as existing, larger customers or customers whose current debts could create conflicts of interest for the lender.
Ensuring Equitable Distribution: The coalition calls for a portion of any future funding for the program to be allocated exclusively for minority-owned small businesses, and that funding should be fairly distributed across metropolitan areas, and that small banks and credit unions should be fairly represented by as lending sources involved in the program. The coalition also calls for the SBA to create a simple and straightforward process for unbanked or lesser-banked small businesses or those that do not wish to apply through their current financial institution to receive funding.
Better Communication and Transparency: The AGs urge Congress to direct the SBA to provide more direct guidance to businesses during the application process. They also call for the SBA to be required to disclose more granular data on the percentage of loans in various size categories, the number and amount of loans processed by each lender, and the geographic distribution of all loans by metropolitan statistical area, borrower demographics, including gender, race, and ethnicity; and comprehensive data on the businesses that receive funding.
More Flexibility and Technical Support: The AGs believe that the program does not adequately serve small businesses and requires more flexibility. The coalition calls for more longer time limits for businesses looking to rehire employees, around repayment and forgiveness requirements to businesses that allocate a smaller amount of revenue to salaries, and expanding qualifications for loan forgiveness. They also urge the Congress to provide the SBA with greater funding to improve technical support and mandate a uniform, user friendly process for use by lenders.
Joining this Massachusetts-led coalition are attorneys general from California, Connecticut, Colorado, the District of Columbia, Delaware, Hawaii, Iowa, Illinois, Maine, Maryland, Michigan, Minnesota, New Mexico, New York, Nevada, North Carolina, Oregon, Pennsylvania, Rhode Island, Vermont, Virginia, Washington State, and Wisconsin.
