By Jon Hill

Law360 (September 30, 2020, 8:01 PM EDT) -- A coalition of banking industry trade groups is calling on Congress to authorize more Paycheck Protection Program lending to small businesses and a simplified forgiveness process for the coronavirus relief loan program, urging lawmakers not to get hung up on partisan differences.

In a letter dated Tuesday, the American Bankers Association and nine other organizations representing banks, credit unions and other lenders told U.S. House and Senate leaders that small businesses are in need of additional assistance and that if more help isn't provided, "all indications" point to a slower-than-expected economic recovery from the COVID-19 crisis.

"While we support congressional efforts to assist all Americans through this crisis, we do not believe small businesses should be entangled in the many differences over a larger COVID relief package," the groups wrote. "We urge you to not leave Washington without working in a bipartisan manner to pass legislation that will allow for additional funding for the PPP."

Created by the first coronavirus relief package from March, the PPP offered forgivable loans of up to $10 million to help struggling small businesses keep workers on payroll and cover certain other expenses. The program got off to a rocky start, but more than 5 million small-business borrowers ultimately took out more than $525 billion in loans through the program before it expired nearly two months ago.

Since then, the continued economic toll exacted by the pandemic has spurred interest in reviving the program, which had around $134 billion in lending capacity remaining when it stopped taking new loan applications after Aug. 8.
 
Republicans and Democrats have both included PPP extensions as part of their proposals for another coronavirus relief package, and the White House has signaled its support for the idea. Although the details differ, the proposals would generally allow particularly hard-hit businesses to go back to the well for a second PPP loan and expand the permissible uses of the loan money.  

But with broader relief negotiations at an impasse, Tuesday's letter adds to the public pressure lawmakers are facing to find compromise on at least some narrow measures that can pass before the House is scheduled to adjourn through the election.

"As these businesses continue to recover, they will need additional resources to maintain business operations, and the PPP remains the most efficient and effective means to assist them through this challenging period," the bank groups wrote. "Helping struggling small businesses should not be a partisan issue."

The letter also echoed calls for Congress to make it easier for small-business borrowers to obtain forgiveness of their PPP loans, the main benefit of the program.

Banks, small businesses and others have complained that the existing forgiveness process is too complicated and inefficient, saddling borrowers with paperwork that some may need hired help to complete and that takes hours for lenders to process.

But while the U.S. Treasury Department and Small Business Administration, which run the program, released a shortened forgiveness application form in June, there have been proposals to cut down on the red tape further by establishing automatic loan forgiveness for the smallest borrowers, which make up the vast majority of the program's participants.

In Tuesday's letter, the bank groups singled out two related bills, S. 4117 and H.R. 7777, which would allow small businesses to get automatic forgiveness for PPP loans of up to $150,000 with the submission of a single-page form to their lender. Those proposed measures, which have bipartisan cosponsors, "should receive immediate consideration," the groups said.

"Throughout the pandemic, helping small businesses has consistently been bipartisan," the bank groups wrote. "We strongly urge members of the Senate and House to continue these bipartisan efforts by quickly supporting an extension of PPP funding and a simpler forgiveness process that will make converting loans into grants easier and less technical for millions of small-business borrowers that have PPP loans."

Joining the ABA on the letter were the Bank Policy Institute, Community Development Bankers Association, Consumer Bankers Association, Credit Union National Association, Financial Services Forum, Independent Community Bankers of America, Mid-Sized Bank Coalition of America, National Association of Federally-Insured Credit Unions and National Bankers Association.

--Editing by Janice Carter Brown.

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