WASHINGTON – U.S. Senator Chris Van Hollen and Congressman David Trone (both D-Md.) have sent a letter to Treasury Secretary Steve Mnuchin outlining their concerns with recently issued Treasury guidance contradicting the intended critical aid provided by the Paycheck Protection Program (PPP), as established under the Coronavirus Aid, Relief, and Economic Security (CARES) Act.
The lawmakers worked to craft PPP to provide relief and liquidity to businesses more swiftly than the traditional loan programs to help them get through this crisis.
“Recent guidance from the Treasury Department seems to weaken the program, which is meant to serve as a lifeline to these small and mid-sized businesses and their employees,” the lawmakers wrote.
In the letter, they call attention to three areas where Treasury guidance would negatively impact the effectiveness of PPP that include the loan term, permitted uses, and forgiveness for non-payroll spending.
Loan Term: The Treasury Department’s PPP interim final rule sets the maturity date of the loan for two years instead of the ten years provided for in the CARES Act.
Permitted Uses: The Treasury Department’s interim final rule indicates that the loan may only be used for payroll costs, interest on mortgage obligations, rent, and utilities, even though small businesses need flexibility to use PPP loan proceeds for working capital to keep their businesses alive.
Forgiveness for Non-Payroll Spending: The Treasury Department’s interim final rule indicates that forgiveness for non-payroll expenses would be capped at 25%