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tv   Lawmakers Examine Paycheck Protection Program Loan Forgiveness  CSPAN  September 29, 2021 7:13pm-9:30pm EDT

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involvement and their ability to hang with us over the last two hours. we will have staff follow up with questions we may have. i want to thank you all for your time today. and with that i will --
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during these we continue to apply during remote proceedings. members are reminded that they are expected to [inaudible] according to code in any remote event. with that said, they will ensure that they can fully participate in these proceedings. house regulations require members to be [inaudible] during the proceeding, so please keep your camera on. in the event a member encounters technical issues,
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the member will be recognized for their question, and i will move to the next available member of the same party. and i will re-recognize that member at the next appropriate time slot, provided they have returned to the sitting. chair members time can be interrupted by technical issues, and i will recognize that if that happens. and give them the remainder of their time once their issues are resolved. in the event of a loss of connectivity during question or testimony, i will reserve their time until the technical issue is addressed. we will provide time for the witness to reconnect. and finally, remember to remain muted until you are recognized. it is important to adhere to
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the rules and staff have been advised to only mute those testifying if [inaudible] . -- and seek recognition at the appropriate time. 17 months ago, during the early days of the covid crisis, this community and our counterparts in the senate work together to create the emergency relief programs. at that time, hundreds of thousands of programs across the country were closing their doors to protect their customers. the dire nature of the situation, what congress created the paycheck protection program. this included unprecedented government effort that included hundreds of billions of dollars to help businesses keep their
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lights on and pay their employees. over the past year, congress replenish the funds multiple times and made the program more equitable for the smallest of small businesses. more than 800 billion dollars in critical ppe p support was provided to businesses in their time of need. the paycheck protection program was never perfect but thanks to employees and reforms made by congress, the program has helped save millions of businesses from permanent closure. that conditions improved from the loss of the pandemic, and it is vital that this community turn to wet maybe the most important part of the program, the federal government promised that this loan can be forgiven and converted into grants. guideline stipulated that the
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fda or other loans, small businesses spend funds on related expenses. the fda has already given 5.6 million loans for business requests. and made 5.2 million for business payments. this means that approximately 46% of all ppp loans have received payment. this represents progress but it also shows that there is a long way to go. this can hinder the [inaudible] . so we must examine the factors preventing loan forgiveness and work to mitigate them. i look forward to discussing how the fda is working to make loan forgiveness as easy as
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possible and maximize federal loan forgiveness, especially for small donor borrowers. i would now like to yield to the ranking member mr. -- . >> thank you chair, and thank you for calling this important hearing on the paycheck protection program loan forgiveness and the process. the programs application will now close, and congress will examine the back and process with a focus on forgiveness, and focus on smooth improvements for small businesses. small businesses need confidence about their economic future. they were smart tax environment going by the 2017 cuts and former president trump's regulatory actions, there are two way relations and the small businesses were investing in their companies, their employees and communities.
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unfortunately, covid-19 shut down mandates devastated the smallest firms from being closed entirely to alter capacity restrictions. and not surprisingly many small businesses who. and federal government assistance more than 60 million business employees. the ppp rough proved to be successful who. to get funds to small businesses for efficiency. as the program shifts towards forgiveness, we have a different perspective for members who participated in the program. but we had here to the rules and the guidance.
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forgiveness should be attainable. congress examine this process in 2020 and the covid package. the fda has also simplified processes. and the direct forgiveness process, it has come to my attention. and can be considered a threat audits based on their the potential for an hesitant act is based on their participation in the [inaudible] forgiveness process or if they had not offered to anyone ppp [inaudible] an opportunity to loan with the woodland forgiveness. there are multiple [inaudible] reasons why lanterns haven't joined the fbi's direct
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forgiveness porto, excluding the facts [inaudible] portal up and running for months. and i cannot stress enough this next reason, which is many lenders would like their small business borrowers in the completion of this program. i will now stand by and let images were punished for working closely with their small business borrowers, the fda [inaudible] their dismal performance in attempt to direct lending through the auto program to provide him [inaudible] that the fbi is still suited to perform many of these tasks. i will continue to watch these developments closely. that today's hearing i look forward to hearing more about the relationship between the fda and private sector lenders. as [inaudible] an open line of communication, and where should improvements be made being going forward. it efficiently. i'm also concerned about changes to the forgiveness process that can open the program to increased levels of waste, fraud and abuse. granting blanket forgiveness as a potential [inaudible] critical safeguards that are in
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place to ensure american taxpayer dollars are protected. ppp loan forgiveness oversight is even more important [inaudible] recent reports indicating that certain [inaudible] lenders have been connected to many of the programs most problematic loans. these are significant issues that i plan to kenya [inaudible] closely, as members of congress [inaudible] small business economic recovery. we months not ignore the barrels that are being enacted that will prevent small business growth into the future at a time when most small business of dried training staff like, president biden and the congressional democrats are pushing tax increases on both the corporate and individual levels. a [inaudible] stepped up basis an inheritance, and [inaudible] a slew of other harmful changes. these tax changes [inaudible] for all business [inaudible] and usa should not be forced to pay for the democrats outrageous and unnecessary spending agenda. our nation small businesses are already facing worker shortages and high skyrocketing inflation. we should be creating an environment that allows small
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business to create jobs, expand, and grow. not perpetuating an environment that requires them to scalping. i want to thank all witnesses for joining us today and look forward to our discussion, and madam chair, i yield back. >> thank you, mister rick lamar, the gentleman yields back. i'd like to take a moment to explain how this hearing will proceed. each witness will have five minutes to provide a statement and each committee member will have five minutes for questions. please ensure that your microphone is on when you begin speaking and that you return tribute when finished. you're on with that, i would like to introduce our witnesses. our first witness is busy tracey ward, [inaudible] of self health [inaudible] known program, who has led the way for [inaudible] in helping very small borrowers access the ppp program. in between 2020 and 2021, [inaudible] just under 2800 ppp loans
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totaling 253 million dollars [inaudible] covid-19. 65% of the ppp borrowers were small businesses and nonprofits that by people of color. so help is affiliated with the center for responsibility lending, and national nonprofits [inaudible] organization dented catered to protecting home ownership and family wealth by working to eliminate abuses financial practices. thank you for joining us today, miss ward are. second witness is mr. leslie [inaudible] of [inaudible] credit union in [inaudible] new jersey miss [inaudible] is the assistant vice president for commercial lending, and i have been personally involved in the credit unions ppp lending. the credit [inaudible] to fdr direct forgiveness platforms so we're looking forward to hearing about how members experience. today she's testifying on
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behalf of the national association of federally insured credit unions. thank you for joining us today, miss pain. our third with is this my law the president and cdc ceo of [inaudible] shows a serve that [inaudible] subsidiary of [inaudible] community investment. no talk is a nation right let work over 100 nation [inaudible] organizations that are and organizations in predominantly electronic communities. miss [inaudible] bree 20 years of expertise and small [inaudible] and community based financial services with an emphasis on the u.s. latino population. miss [inaudible] testified before the committee last congress on issues related to underserved district
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development so it is my pleasure to welcome her to the committee. the ranking member mr. will [inaudible] now introduce our final witness. >> thank you, madam chair. our next witness is mr. robert fischer. mr. prince fischer's press that [inaudible] tioga state back in [inaudible] new york. [inaudible] also known as i see da. additionally he is a member of i see a [inaudible] delicate port and his policy development and [inaudible] committees, not to mention mr. fischer is a fifth generation committee debunker. he is also a graduate of the university of notre dame and in the united states and forth that were. mr. [inaudible] of want to thank you for taking time today for [inaudible] thank you for your service to our nation. also i want to thank the witness for joining us and i look forward to her questions. thank you for doing all you can while we were in this pandemic area here and in the time that
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we've been involved in this your testimony today is going to be very important to us to be able to understand some of the issues that you face and that we need to be addressing. thank you very much, and with that, madam chair, i yield back. >> thank you for being here today. miss ward, you're recognized for five minutes. >> thank you [inaudible] ranking member meyer, and members of the committee. mine is tracy tracy ward and i'm self help tremendously developed the financial into this institution and people are. thanks for the opportunity to get my testimony today. [inaudible] keep together to create the [inaudible] protection programs [inaudible] small businesses, [inaudible] congress designed ppe as forgivable loans with the explicit promise of [inaudible] don't have to be repaid. today we are asking for several
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fixes in ppp for people to ensure that promise can be kept. fda implementation from an unprecedented program was remarkably fast. but it came with a [inaudible] constantly changing set of rules and congress [inaudible] understanding these rules [inaudible] quite a challenge for small businesses in survival mode, trying to access [inaudible] . and as a result, [inaudible] small businesses are not getting the [inaudible] props every pay [inaudible] an example [inaudible] contractor in illinois who [inaudible] much-needed ppp loan [inaudible] 4000 dollars. two days before he applied, fda issued a new rule, effective immediately, that-limited the way [inaudible] document request. now his loan is not forgivable.
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[inaudible] able to recover he's being held back by an unexpected 20,000 dollar debt trap. and the challenges for ppp loans, there is an adjustment in the [inaudible] . proprietors [inaudible] . the smallest of the small and there are thousands of witnesses. childcare in north carolina, which would involve almost 750 dollars of ppp funding. this was eligible for an
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additional 14,000 dollars. [inaudible] other businesses like childcare. it's important to remember that many loans are given to small businesses of color but -- there is not always access to the structural innovations that have been a part of responsible lending. [inaudible] [inaudible] and less able to sustain it. loan forgiveness can. to, the spca can.
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[inaudible] three, the sva can only if they're in the firm process of forgiveness. the forgiveness should be explained. there is unnecessary paperwork and for loans a 25,000 dollars or less, they may not qualify for loan forgiveness. finally, improve and focus sba's programs. so that businesses are not harmed by uncertainty if they [inaudible]
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responsible child care and serve their communities without changes, and ppp has inequities. and [inaudible] thank you for addressing this important issue and i look forward to your questions. >> thank you, ms. ward, you are recognized for five minutes. >> good afternoon, chairwoman velasquez and ranking member luetkemeyer. >> commercial landing at affinity credit union. there has been management of the ppp program. we help our members through challenging times and i thank you for the opportunity to appear before you today. we go above and beyond to help small businesses, and many
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credit unions rely on ppp lenders. now the spca is [inaudible] and credit unions may rely on small businesses. there are approximately 58 million in lending. we have provided additional loans. our overall average ppp loan is over 90% of loans and. our smallest ppp loans approximately 700 dollars. many customers come to the credit union in the every day process. and the forgiveness process is challenging.
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there is a complex application. however, pricing continues to [inaudible] . [inaudible] one credit union, such as affinity has invested significant money to helping businesses complete applications. and help streamline the overall process. i know it is frustrating for credit unions, and iraq dates are ongoing. their applications may not be regulated. there are almost 80% of loans that have been forgiven. the forgiveness loan applications take, on average, nine days from spca approval.
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sba's introduction was [inaudible] . the fda also [inaudible] . the time and money invested in solutions and counted over the last year, we realize many credit unions have not been. in our experience, it does not meet the criteria for a nonprofit lender. we look forward to helping small businesses that have not had the ability to build credit. [inaudible] credit unions could be more efficient at the outset. some credit unions are [inaudible] .
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[inaudible] moreover, integrating a new [inaudible] . there are also concerns that the spca will not [inaudible] . or give a [inaudible] . and some credit unions feel that you are wing can be too little. and that wars may have no control of the system. there are frustration throughout the process. but the sba can change things for borrowers. and [inaudible] for forgiveness. [inaudible] to, eliminate the commitments for the larger [inaudible] . adopting this approach to forgiveness reviews will conserve the sva resources and allow the agency to allocate resources that [inaudible] .
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we [inaudible] how we have been able to help small businesses. and helping credit unions as a priority for all our members. we remain committed to making sure that the ppp remain successful. i thank you for your time and we welcome your questions. thank you, you are now recognized for five minutes. >> thank you, good afternoon chairwoman velasquez. i am ceo of the national association for [inaudible] . the paycheck protection program. the small businesses that they represent. we represent a national network of many organizations, and geographically and ethnically
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diverse latino communities across the nation. our vision is to dramatically [inaudible] and help the needs in communities we serve. we now help strengthen the reporting in our network to deploy capital. we know that the strength of the u.s. economy relies on communities hard work. and leadership. they latino community in the united states is often heralds, and the average economic effects of the pandemic have unfortunately impacted latinos disproportionately. our institute surveyed people and showed that latino small businesses suffered negative impacts. at the same time, latino businesses receive ppp loans that only half the rate of their white counterparts.
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[inaudible] lending, we all want our members to [inaudible] . there are heavy hitters and self help. we are able to provide loans when banks could not exist. and the number one ppp lender in the nation, including commercial banks. these loans average around 15,000 loans each for a total of eight billion dollars in ppp lending. there are over 12 billion and over half of ppp borrowers have had applications.
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[inaudible] of the direct forgiveness portal and the forgiveness applications for 150,000 more. discussions with members have not had a primary channel for their work. between april and august, the numbers doubled from april. ppp lenders may [inaudible] end directly finance. and there [inaudible] [inaudible] some clients may have lack of awareness of the process or lack of access to the process. the additional members find from coast to coast that the portal was not the primary channel for forgiveness, given
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the lack of access to technology in the portal. ppp lenders may make loans and are supported for [inaudible] . this will further ease the burden and this would lighten administrative loans. we agree that ppp loans are in a business class by themself. knowing that were made in the initial stages of the paycheck protection program in 2020 experience some confusion, resulting in errors that generated loans and exceeded borough expectations. in 2021, lenders [inaudible] , particularly in changes of
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small amounts, there were undue efforts to the bore worries that the ppp program was designed for. this will certainly use ppp loans to ensure that [inaudible] . i don't have time to go through my recommendations but there are outlined here. thank you very much, -- >> you are now recognized for five minutes. >> chairwoman velasquez, ranking member luetkemeyer, i am bob fischer, president and ceo of bank, an association of community banks and spencer, new york. and chairman of the bankers of america. so thank you for the opportunity to testify on this hearing. the ppp was a natural fit for community banks. we are small business loan ding
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specialists. my bank's ppp lending is the pinnacle of the community bank. we made a total of 929 loans for 64.8 million dollars, saving roughly 10,000 jobs. sour average low is just under 70,000 dollars. and the bank has a 40-year history with the lenders, hoping to navigate sometimes challenging levels on behalf of our borrowers. and the largest ppp loan was to a independent center, a large not for for profit in new york, dedicated to helping people with disabilities remain independent. the loan helps for event staff layoffs and allow the center to continue to provide critical services in our community. on the community banks have similar stories and results, and in aggregate banks made nearly 60% of the ppp loans
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which supported nearly 60 million jobs. there were 80% of loans to small businesses. and nearly 70% of the businesses to use veteran owned small businesses. i'm proud that we stepped up to support the survival of these diverse businesses in the time of crisis. we are well through the forgiveness phase of the program, and this process must be as simple as possible for borrowers, so they can focus on operating their businesses and is still uncertain environment. we are grateful to this committee and congress enlarged for its role in making statutory changes and advocating for a streamlined process. as you know, the fda has created the direct bureau forgiveness port for people see loans of 150,000 dollars. my bank has a strong record of processing forgiveness application, and has chosen not to use the portal. like many community banks, our
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true value proposition's relationship lending. we believe we owe it to our borders to ensure a smooth process from origination until full forgiveness. if there are technical or communication problems with the fda, and this has frankly been a major concern, we want to use our expertise and relationship with the agency to resolve them. this has good business practice at best for our borrowers. we are working expeditiously and are as eager as our borrowers to pay in full forgiveness. [inaudible] insist that fda respect lenders tries not to use the portal. instead, the fda has threatened to audit these partners. what's more, the fda suggests that lenders are deliberately delaying forgiveness to spread out the income, that practice would be unacceptable and would cut against the grain of community bank relationship landing. i can assure you that in a
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community bank that i know of is engaging in it. our strong record of a ppp landing, in a time of crisis, that is not beat banished by this these accusations. my bank and other community banks choose to prefer our bore relationships and not be cut out off the process by a [inaudible] fda program. more broadly, bank underwriting and servicing is what makes fda landing programs so effective and must not be displaced by direct programs. as we compute the ppp, reports of fraud and abuse have surfaced did that we get. these problems must be reduced to the greatest extent possible not only in the ppp, but all in and all fda programs. my bag has experienced no ppp fraud and 100 percent forgiveness. like other community banks, we own the consequences of our lending decisions, and under right with great care. however, certain vendors with little experience in underwriting or with the fda,
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crowded into ppp. safeguards with lowered and response to the crisis and not surprisingly these unjust babies subject to a higher incidence of fraud. as noble [inaudible] returns the fbi should proceed with great production as it considers changes to existing programs. our state bank and kim tioga state banquet benny commanded baghdadi value a [inaudible] sustainable. . [inaudible] program. fraud puts all programs that list. thank you again for convening today's hearing and for the opportunity to do offer by perspective, and i'm happy to answer any questions you may have. thank you. >> thank you, mr. fisher and thanks to all the witnesses for being here today. as for your words on engagement on the ppp. i will begin by recognizing myself for five minutes. miss payne, less than one quarter of all ppp lenders have opted into the [inaudible] for business platform.
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even though the credit unions invested in its own platform you also opted into fda platforms. can you share with me any feedback you may have had on the fbi platform? >> yes, thank you for your question. we have opted in and when we have opted in we [inaudible] that has been working quite well. we jumped out to the trick of this literally is part of this. i think [inaudible] media and investments that such. we often because we want to give our [inaudible] every opportunity for forgiveness. so we have offered that. and today as well as we have seen approximately 12% of our borders go [inaudible] so the majority of our members are still [inaudible] forgiveness. [inaudible] from our members is that from their perspective the portal has been user friendly.
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from the lenders perspective, [inaudible] and we do have our own [inaudible] we have to proactively go into the air fba portal and check the website and put it data in the beginning of the process as well at the end of the process. so another concern we have is that the early stages [inaudible] and the communications that are borrowers will get that we will get from the fba and when we get that communication. >> thank you. miss ward, we have heard from borders that they are responsible for being with interest access loan amounts caused by ppp [inaudible] miscalculation from a lack of rules and clarity early in the program. should this excess known amount before given if loan proceeds were spent on forgivable purposes?
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>> we believe they should. we've seen many bores that are facing issues where they applied based on the current rules in place as they understood those, [inaudible] rose more complicated. [inaudible] to include owner health care costs [inaudible] so could document payroll, some [inaudible] others had different methods that could be more complicated. so we are asking borders that are caught in this issue of having a plight in good faith around that's safe and used to keep their business operating and to keep their staff employed and now that forgiveness because up [inaudible] changed within days of when they applied, they are not going to be able to [inaudible] forgiveness. [inaudible] >> and how is you [inaudible]
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handled in these good faith? >> so we are working without borders. when we find situations like this, i will say, likely we are not finding any situations like this with our own ppp borrowers. we had processes in place and worked closely as mr. fischer said, community banks are very [inaudible] at the relationship [inaudible] work hard with our boris to make sure that [inaudible] they are getting and how to get this we give this. we are hearing and seeing these reports about essentially small borrowers who are caught in this i'm not going to be able to get forgiveness. [inaudible] a couple of cases where we have this borrowers in the situation [inaudible] we're working with them to try to identify [inaudible] documents they have that might have [inaudible] for forgiveness. >> thank you. this pain, any comments on this
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ppp [inaudible] ? >> yeah, federal loans with the initial ppe guidance, it was [inaudible] evolving. but the members and scientists will fight [inaudible] [inaudible] i think that each loan should be like that on his own merits. if there was nowhere and it was made in good faith, [inaudible] we are permitted, that i believe that [inaudible] . >> thank you, miss bilonick, would you support increasing the qualifying loan amount to 350,000 to help fba deliver forgiveness more efficiently when and if enable more small businesses to focus on their recovery? >> absolutely. i think anything that will reduce the burden on both the borrowers and lenders is a positive and should be supported. this would bring the percent
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over 90% of ppp zones that i think [inaudible] recommendation. thank you. >> thank you. my time has now expired. and ranking member mr. bookmark is represented recognize now for five minutes. thank you madam chair. and whatever you see that basically one of six loans are made by friends x and [inaudible] those are looking as [inaudible] fraudulent, and most of the loads are under 350, 000, i [inaudible] know ig report said that half the loans under 350 probably are are where your theft and anti-theft or fraud are. best not to those lot to look at those is [inaudible] the administration leaving 85 million dollars of anti military equipment biden afghanistan for that reason was to have. this is not for us not to go after people who have infested
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intentionally gamed this is dumb and you are baking away with dollars that taxpayers have paid in, and have the program would not be looked at, i think it's very, very wrong way of approaching this. mr. rogers, a, mr. fischer. you talked about, in your testimony, something that is very, very concerning to be. with regards to the fbi and their threat to audit fba and the threat to audit agencies, bags, credit unions, [inaudible] if they don't participated the portal. what is your experience with this? what have you heard about this? can you elaborate a little bit? i know you said your testimony, i've really get here as well, would you like to elaborate on this a little bit, please? >> sure. we received communication from the fba on monday that there was a potential for an audit if you did not participate in the portal, the forgiveness portal. and we have you, know, from day one we decided we wanted to be that interface between our
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customer and the fba because it is a very confusing, complicated process that we and we feel that we'vee expertise, the customer doesn't. so we want to, you know, control that relationship and help our customers navigate through this whole forgiveness process. and we don't feel we should be -- we've worked forgiveness very hard, in fact we only have five months from the first round that are still waiting for forgiveness, and it's not for a lack of effort on our part. we've been reaching out to this boards to get them to seek and apply for the forgiveness. >> [inaudible] a choice on your part on how you want to approach forgive, the is fba trying to threaten you into making their choice, basically, right? >> that's how it feels yes. >> well i would urge you, if you find banks that have received this threat, and then receive an audit as a result of that, please contact me and my office. we want to follow up on this, we want to hold the fba accountable for outrageous statements like this.
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this cannot go unchallenged this cannot be allowed to happen. please work with us if you see this happening within the banking community that your work and your association works for. thank you so much for that. you know, you made some great statement, mr. fischer, as you were going through, discussing the banks making the loans. you know. , the banks have something called, know your customer, and [inaudible] i think we found that, and as i mentioned earlier, the [inaudible] don't have that sort of fire wall, and as a result, they're really the ones that are causing a lot of problems to, well there have been a lot of problems with ppp compared to the other program which [inaudible] which is almost fraudulent stuff. but at the underwriting [inaudible] and you know your customers seem to be a real key. in being able to minimize the abuse, and also set you up for being able to get forgiveness for your customers, because you've done it right. would you agree?
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>> i totally agree. i mean, that's, we know our community, we know our customers. and i think that's what they make the process work for community banks and why we were able to do 60% of the ppp landing. >> what's disconcerting to be is as we continue to go through this process here, and we are looking at [inaudible] bringing on the auto program into the ppp discussion here, not necessarily, but if ppp program here, [inaudible] having the thanks to the underwriting able to do the hard work of know your customer and to prepare the loans to be able to be approved by fda, show that that's a template i think for being to do things the right way and mina buys fraud to abuse and [inaudible] fraud destroyed, it really sets up the contrast of the does fbi fba need to be in the direct lending business? so would you like to address that question? >> well, we've always fought
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that with the seven a program and five of programs that could be debunks, we have that relationship with a barber, and i think it really has produced spa fraud. as i said, we've experienced zero fronted a ppp landing and i think that just shows how relationship banking works, and how utilizing community banks to be the interface with small business is so effective. >> thank you very much for your testimony, mr. fischer. i certainly appreciate your thoughts and your observations today. thank you. >> and, i yield back. >> the gentleman yields back and now we recognize the gentleman from maryland mr., or [inaudible] . >> thank you madam chair, and thank you for calling this hearing. miss payne, i'd just like to start with you if i might. from your own perspective, what were some of the considerations that went into you offering your own ppp forgiveness platform as opposed to the
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fba's? >> well the first consideration with that, there was no [inaudible] that fba was offering or putting out their. the forgiveness process was technically a start, almost [inaudible] forget applications in september. of 2020. so we need to put something in place. and we gave [inaudible] program, we trained our staff, and we put other resources. we wanted to be [inaudible] this was a temporary loan to help this nurses get through a very chaotic and dramatic time, and they needed to know that this was [inaudible] not that they had original. debt so we responded to what's the need was. that's what we did. we initiated our platform and invested the money and time. >> most of your credit union
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members, rather than the sva, how would you evaluate the outcomes? are they comparable and are there things that jump out at you that are cause for alarm? >> no, we have not had cause for alarm. and i will admit early on that we were learning it. and we did not necessarily have loans going under review. they were taking 10% of our loans. and that did create some back and forth, a problem. and it caused some concern for our members. we did a review. and we could not tell, is it random or otherwise. in that sense, that has started fully, but once we are up and running there may be some issues, but from my testimony,
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we have submitted 80% of our portfolio. that has been responsive. but overall we have had very good success here on behalf of our members. >> mr. fischer,, if i could turn to you for just a moment, do you approach folks as president of tioga and chair of the independent community bankers of america. so far, only about a quarter of all ppp lenders have put into the direct forgiveness platforms. what do you think could have been done differently to make that platform more appealing to persons? and if you had your druthers, let's hope we never go through this again, but if we were to go through something like this again, what would you recommend? >> i think the issue is that
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most things have a forgiveness plan in place, we have already developed systems, we have a methodology of how we put customers through forgiveness. so fda rolling this out late in the game has made it problematic. so i think had they wanted this portal to be used, i think they would have rolled it out when forgiveness started. i think it's late in the game to throw in another ancillary system when we already have one down for our customers. >> okay, thank you madam chair, i have no the questions. i yield back. >> the gentleman yields back. the gentleman from texas, mr. williams, is recognized. >> thank you madam chair. before we get started, i want all of us across this country to remember those 13 families that are being prayed for, from the loss of those young men and women. and also remember those still stranded in afghanistan. i'm a small business owner, and have been for 51 years, my
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whole life has been dealing with credit unions and community banks. and i can tell you that main street america doesn't better than the federal government. i want to say thank you to all the lenders for getting this program out. but also the spca wants to get involved in the process with puddles and so forth, and now we have to have hearings. so the private sector does it much better than the government. when i talk to borrowers and lenders, i constantly hear about communication with the sba. last week a lander told me that documents had been submitted for forgiveness in january. we are hearing that a lot. but they had yet to receive an update on funds. when the bank calls an hotline, it gets a message saying it is no longer in service. and the spca can no longer continued to reach community banks when they are taking all necessary steps to recover from the pandemic.
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so mr. fischer, thank you for your service and what you are doing. i want to thank you. can you discuss your interactions with the fda and were spawn about their inquiries? >> communication throughout the process have been difficult, especially early on in the process. we get some great connections to our local sba office and those are greatly helpful. but they are also limited in some of the knowledge that they have. obviously this is a new program. there is constant guidance changes and things like that. so communication was very problematic throughout the process. and it continues to be somewhat problematic in certain areas. i know of a local bank that i just heard a story yesterday, and they had opted out of the forgiveness portal, yet their customers all received notices from spca saying that they could apply through the portal,
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which was not active through the bank because they had not adopted into the program. this caused chaos with consumer service centers. so we are hearing stories like this all over, i can tell you firsthand. it is tough to communicate them. >> lenders were given to options for ppp loans. direct forgiveness with the spca or opt out, and continue to process loan themselves. we are hearing about that today. most commonly, bankers did not offer direct ppp forgiveness for two main reasons. lenders had already created internal processes. or contacted to a third party, when there was a important forgiveness aspect of ppp in the future. in addition, as we've heard today, many banks were reluctant to opt in because the fbi has not been most reliable partner in the past. unfortunately, on monday morning, as we've heard, the fbi sent to notice that
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businesses would be under more intense scrutiny for their loans. if they did not participate in the portal. and here they are making late changes and making it up, causing confusions and headaches. so mr. fischer, you've touched on this, but i think we need to talk about it more. can you discuss the risks that you may face and your recent announcement from the spca, and why you chose to opt out of direct ppp forgiveness in the first place? >> obviously, as i said before, they are potential audience. follow-up emails that may be said, well, it wouldn't be uttered -- but i'm not sure which led to believe. the reason we opted out is because we are relationship funders. we want that interface between the lender and sba. and because it's a complicated process, you want to make sure that our customers are given the correct information, that they don't overrun the entire
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process. we know it, we've been through it, we've been with them for 40 years. so we want that relationship that we have, both the fbi and our customers want that. >> well a heavy handed government is never good. i understand that. but quickly mr. fischer, can you understand and elaborate on the relationship between ppp and lenders, and how more government involvement may draw this process? >> i think relationship banking is the key for community banks, how we interact with customers, and i think it really cut down on fraud. we have had zero fraud. most of the banks i now have had zero fraud. so fraud in just having those relationships is critical. >> thank you for that. and the government cannot say that. so thank you for what you are doing. i yield my time back. >> the gentleman yells back. i recognize the congresswoman
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from georgia. but i would like to also say, to mr. fischer, when we had the first part of money that went out in two weeks, when it was all gone, in the data that we did not get from the administration banks, it showed that many small businesses in under served communities, and many businesses, were not able to access any ppp money because they did not have a pre-existing relationship with banks. the big banks did not lend those businesses. it wasn't until we intervened and we demanded, from the secretary of the treasury, to set up money for mission based lenders, that those data and numbers changed. so if that is true now, with a great work that the fbi is doing, in informing small
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businesses what they need to do in order to fill out the forms and to take every step to be able for the loans to be forgiven. you are recognized for 20 minutes. >> thank you, chairwoman velasquez. i have a similar line of questioning to the point you raised. and thank you to ranking member luetkemeyer for calling this hearing. access to ppp loan forgiveness is something i've been very concerned about. in particular, we have heard a lot about discrepancies in loan forgiveness among underserved small businesses, particularly minority owned businesses in my community. we've done some informal surveys of who had gotten forgiveness and who had not. we found that minority owned businesses, those i asked, they often did not know how to
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follow-up. and i think the testimony here raises some of the problems that can occur with some of these very entrepreneurial and vibrant businesses, that just don't have that traditional relationship with a lender. and this is one of the reasons i worked with the committee to submit additional views to the additional american rescue plan, encouraging the small business administration to work on additional assistance, including ppp loan forgiveness. this took a very important step in ensuring access to employer loan forgiveness, by opening their portal to provide forgiveness of up to 150,000 dollar loans. unfortunately, this is also creating some trade-offs. just to start off, who can you talk a little bit more the, i don't know what i would know sort of issues, that would come up. and with the hispanic
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community. when they are trying to approach working towards ppp loan forgiveness, what are some of the barriers that they face that we may not anticipate? >> absolutely. so i think one issue that comes up, and this is not limited to the latino community. but this can be a big question mark. i don't think anyone is approaching relationship banking, and many are involved in a relationship inking. [inaudible] so i do take some exception to those comments. also, i want to just raise that i think the community base lenders and the mission based landers have often into the portal because unlike other institutions, the portal that the spca is providing is an improvement over whatever internal portal in other systems may be existing.
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these would be used internally. so they are not use exclusively through the portal. there are clearer, federal, overall [inaudible] . but yes, the challenges are real. and there is specific technology. there are problems with accessing it. one other thing that my members reported that was very challenging to follow up with was their clients. so to individually follow-up with each one of those clients would be impossible. people change their phone numbers, or anything, that was very challenging for the system. -- >> i think that's an interesting point that i think goes to the housekeepers and landscapers and this vibrant
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entrepreneurial economy that we have that often is not in the traditional path of these relationships. what can we do better in order to make sure that a lot of these small businesses know about the forgiveness program and are able to access it? >> well, one thing i want to say, prior to being in this role i actually was a [inaudible] in washington d.c.. so i was in that role. [inaudible] and we were either rolling out programs are following through them. there is this direct line of communication between sba and those under. so if you look in the district office where there is a more direct relationship with the community -- i would actually just suggest that that should happen with more of a discrepancy behind that. so that there is someone to
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call us when you have a question and you are in a community based organization. and there is a lot of red tape preventing you from working with them. so we cannot hide from the sba. and i really need knowledgeable resource staff. and i think that's a great way to connect us with the overall mission of the sba. >> thank you. >> with the sba and groups like that, thanks so much, i yield back. >> the gentlelady yields back, we now recognize the gentleman from minnesota, mr. harrison, for five minutes. >> thank you madam chair. i like to follow up on a presentation made by ranking member luetkemeyer and congressman williams of texas. i think we are fortunate to have someone like congressman luetkemeyer.
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he has made some good points. there is a lot of flaws in the banks that have made these loans and their customers. they are concerned about their communities and businesses. they have some pretty good models, maybe something we have stumbled into. but looking at perhaps utilizing the other sba loans to minimize the fraud that we have seen. and help the taxpayers and help businesses. second of all, congressman williams has been in business for 50 years. he has interacted with both bankers in the private sector and with the fbi and others in government. and there is a clear difference. and one is trying to get business and the other is trying to get to it if they get to it. that's the way bureaucracies operate and the record of the spca throughout all of this has been good in others but not good in other ways. and the banks that we have
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talked to in this district and others they have problems with the sba. and they have problems with us trying to get some resolution, trying to get people moving. and that really shouldn't be happening. sba should be handling these issues. i'll give you my perspective, i was a congressional relations officer in treasury for 18 years. i've seen the brioche chrissy a bit. and i'm just moved by the sba to try to gain some control back of the ppp program when it was one real for the banks. and it was an effort to retain their turf. they see the writing on their wall, that if we turn this over to the banks, where we can minimize fraud and do better for our customers, that they are going to lose some of their power. so i think that this may be not so much to help everyone but just as a bureaucracy, looking out for ourself. i would add, madam chair, i just want to do a couple housekeeping items with you. when do you expect that we are going to get secretary of
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treasury yellin to fulfill her duties and testify before our committee in person? >> we are working to get her to come as well as the administrator. to discuss the ppp forgiveness. but we are working on the reconciliation process right now. so my guess is right after that we are going to have the administrator come in. >> to your credit, and he said in the past, and you joined with the ranking member, that you wish he testified earlier. so i appreciate that you are going to continue to try to encourage her to come before so we can have the hearing. and secondly, and i know how important this is to forgive these loans, and make sure businesses can move on. most of them have received these monies as a new life that have helped. but there are some small businesses still out there that this committee has an obligation to help.
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and it would for instance be in the restaurant arena. when the monies were expanded from that almost 28 and a half billion dollars, they went to the people on a priority list, and many of us knew that this looks was discriminatory. and the people not on the priority list are sitting out there, well over 100,000 restaurant owners, and they haven't received any money. and congress hasn't done anything to follow that up to this point. and that's not -- if i could just go on to say. >> yeah. >> i don't think that's fair. because people in the business are being helped and others who may be in trouble and need help are waiting. and i know the ranking member has a bill, i've cosponsored it, it's reconstituted money. 60 billion. let's work together, if we can, and get that money to restaurant owners. they really needed at this time. >> i have heard you and many
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others express concern, around many underserved businesses. and the very, very small businesses waiting to get any access to ppp even though they tried the hardest. and now i wish that you were out there are compelling the big banks to provide access to those ppp loans. so -- >> i agree with you, madam chair. i agree with you. i'm not a big fan of the big banks. and i think that one thing that has come out of the ppp with underserved folks, is that they do have to have a banking relationship with community banks and others. and they are in a better position long term to help the small businesses to be successful. so for that i -- >> the numbers were there. but [inaudible] . >> okay. thank you madam chair, i yield
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back. >> the gentleman's yields back and now we recognize the gentlelady from california, ms. kahele. >> ms. ward, you stating your testimony that reporters of the ppp loans issued in 2020 included no demographic information. this is something i pushed hard to correct and most recently sent a letter to the biden administration asking them to look into disparities in ppp. and the lack of information, to publish a report, where they look at census tracks in l.a. and they found out that businesses in majority white neighborhoods received loans at twice the rate that majority latino census tracts received. 1.5 times the rate of businesses. 1.2 times the rate of asian areas. so now we are in the forgiveness stage. so can you elaborate on why this kind of data transparency
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is necessary and do you have recommendations on how to correct the data gaps in the forgiveness process? if we don't have this kind of data, what do you feel businesses would stand to suffer from? >> i think i see a taking steps. i think that's important. [inaudible] . what we can do with the insurance programs. and what congress needs to do to make sure that these dollars are distributed fairly. i will say, i've called it a crisis, and there are short-term periods to get a limited amount of funds. there are constant changes, constant improvement made,'s
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constant applications. and that may be really hard for borrowers to keep up. by and large what we saw, was an agency trying to get this money out as quickly as possible, and didn't say, okay, this is an entirely new program. it's unprecedented. and the sba we sources became an overwhelming challenge. i'm very happy to see that they have been able to develop their own business portal. because there were a lack of [inaudible] who did not have the resources to develop their own. sba's portal is a lot better,
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it's a significant improvement. [inaudible] and self help, like some of the other lenders here today, nothing is optional too [inaudible] . so while i commend sba for creating this,, creating this process, they should be able to work with. >> so ms. ward, i was asking about demographic information. so how can we correct this? and with the forgiveness portal can we actually get that demographic information out? >> i didn't mean to get off back with your question. has committed to get demographic information. that remains part of the information that sba is set to collect now. but in early days in the loan
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applications, those questions were not considered. >> let me ask also about sole proprietors. they face unique challenges, i want to make sure they get the full benefit of the program. so many were devastated. and can you speak to how the sba forgiveness portal works for sole provider specifically? is it more accessible for them than the ones operated by their lenders or not? and which of your recommendations in your written testimony would be most helpful for those sole proprietors for these micro businesses to access forgiveness and remain in place? >> [inaudible] they are already doing a good job processing forgiveness. and you noted, the needs are
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pretty complex. and you are in your accounting department if you are a sole proprietorship. so having your lender, working with you, working on complex rules, and delivering information, we think that's important. [inaudible] the nitty-gritty and details, specially for borrowers, we still think that's pretty complicated. so there is not a lot of [inaudible] at the standards office. [inaudible] >> thank you, i yield back. the gentlelady yields back, and we now recognize the gentleman from minnesota.
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>> thank you madam chair, and thank you ranking member luetkemeyer. i will just say that i am really strongly concerned about the leadership of the sba under administrator guzman. i can tell you that the information [inaudible] . otherwise they're going to be subject to audience. they are telling the government that i will fight tooth and nail against this. on both sides of the aisle. that's not how we treat our small businesses that are just coming out of covid, just struggling to make it. so i would just say that we can't rule and have sba ruled
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with a heavy hand. and earlier, we talked about ppp banking. my comment is that our local financial institutions do a tremendous job, upon distribution of the ppp loans. they did it in a quick way, but i just want to publicly thank our lending institutions that helped businesses stay afloat and help them stay open during the covid crisis. i would also like to thank administrator guzman from the state of minnesota. his trip went very well and myself and congressman hagedorn, both members of this committee, were invited by her and her staff. i will stay that for my staff and those in the district and those in washington d.c., they have been very concerned with the lack of effort and the lack of response that administrator
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guzman has given to us when we requested information. i would describe it as a late, slow or no response. and that is just irresponsible. her actions speak loud and clear. her partisan actions speak loud and clear. my question, is what has the sba been like for the lenders? has it been clear? as it relates to forgiveness? mr. fischer? >> it's been problematic throughout the whole process. and spca did a good job in some parts. we were flying from new york to l.a., making it up as we were going. so i commend the sba in some ways but it has been problematic getting answers
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from sba. and that's why it's important to be that buffer between the customer and sba. because we have relationships with people at sba. and even having those relationships, it's been difficult to get answers to complicated questions. >> thank you very much for that answer. are you concerned with the new sba direct forgiveness portal? and if you are what we like to see moving forward? and how would you like to see congress help? >> i'm not concerned with the portal. i think as far as having that portal, i think it's a great option for some banks or institutions that don't have a forgiveness method. but i think, don't force peoples hand and utilizing the portal. and i think you lies those relationships with the borrowers. i think we create that buffer and we can help with those complicated questions. and i think even ms. ward
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alluded to the fact that even some of our smaller borrowers -- i mean, our smallest loans are 340 dollars. some of the questions that arise are smaller, so if we can help some of the questions that arise through relationships, that's something we can do. >> so mr. fischer, i appreciate those answers. and are you hearing more from the institutions that help keep our small businesses afloat? you know, as i do, that 16 months ago, there were hardly any answers. and we were working through this. our lending institutions across this nation deserve so much credit for helping us out and helping get that fund to those who needed it in the short term. so with that, as we move forward here, i want to make sure that we talk about the economic drivers for small
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businesses. and we need to take care of our small businesses, as mr. fischer said. as well as the customer relationship that is extremely important to have in small businesses. i understand that relationship between bankers and institutions as being incredibly important. with that madam chair, i yield back. thank you. >> the gentleman yields back. we now recognize the gentleman from pennsylvania for five minutes. >> thank you madam chair. i understand, ms. ward, that your agency worked with many borrowers, who require assistance in applying for ppp loans. what kind of challenges are these borrowers facing at the forgiveness stage? >> thank you. the biggest challenges for our loans and forgiveness arbery
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was who misunderstood and thought they were changing rapidly. and they were calculating their lone wrong. some borders were responding by calculating the wrong amount. and so we are seeing businesses that contact the business with the understanding -- [inaudible] they want to keep employees, staff paid. and i have this understanding since they are going through credit. some would not have taken it if they had known that they would have had to pay back. because in a crisis you don't want additional debt. but we have been shocked that some of these small businesses especially, [inaudible] . that they relied on [inaudible] . micro businesses about 25,000
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dollars. by and large, especially for one person businesses, they qualify for some forgiveness. but having to go through the paperwork required, on the applications, for business that small, is a barrier and we think automatic assistance in some cases would be appropriate. and we think that sba should stop investigating fraud. and automatic forgiveness, where it's in the ability, should be given. and create documents. we try to work with a lender. given automatic forgiveness, for many businesses, they do not need the fbi investigating their case. >> let me follow up.
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what options do the borrowers for ppp lending have? what options would they say if they are not getting responses? >> i would say that they should absolutely be monitoring all forgiveness applications. within a reasonable timeframe. that's the worst thing in the world for small business. you could be applying for months on end, looking and calling for months on end, to the sba. but the borrowers may never know whether they will be forgiven, whether they have some assistance in store. and they don't know yet, if they don't know whether they are going to be forgiven, and then it cannot continue investment. there are a higher risk issues.
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work on loans and [inaudible] see that borrowers are not penalized. we have a third now of [inaudible] that can help them go back and have their loans forgiven. >> thank you madam chair, thank you very much. and for this hearing opportunity, madam chair. >> the gentleman yields back and i will now recognize the gentleman from pennsylvania mr. meuser. >> thank you madam chair, testifier's, other members of the community. ppp, we can all agree, saved livelihoods and worked out well, certainly throughout pennsylvania. and the spca staff was very helpful along the way. they were taking calls at 7 am
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and sometimes at 11 pm for a number of clients. the spca should be an advocate, by definition, for small business. so the ppp was successful because it was created by the trump administration treasury department. it was driven and administered by the private sector. with the support of the sba. so public private partnership, if you will. it worked out well. the idea loans, and i know that's a challenging subject to bring up, they were a different story. they were run, not exclusively, but often by the sba. so the sba is serving as an advocate for small business. wouldn't the sba then have checked with community banks beforehand, before sending out such a letter? and basically mandating and
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strongly encouraging the use of this direct forgiveness portal? mr. fischer, were you or any of the community bank associations advised or asked for input on the requirements to use a direct forgiveness portal? >> no, we were not advised that this was going to be mandatory or pushed down on the banks. forgiveness had been going on since september of last year. >> right, and this email was received on this monday morning. correct? >> yes. >> and do they explain it all why was so important that, even though, as we discussed, there were minimal fraud and problems, why this portal would be so necessary? they go over that with you? >> they have not, no. >> okay. and the letter, the email that came out for the direct forgiveness, stating that many banks were managing their
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accounting and financials through 2022 as part of a better accounting plan for themselves. is that something that has been discussed or do you think it is a widespread issue? >> not with a community banks that i know. we all want to get those loans out, get the loans forgiven for our customers. that's been our plan. since day one. we have always deemed it a short term solution to help our small business customers and help our communities. >> right, all my community banks through my district say, that their customers outweigh some perhaps improvement of accounting, for 2022. so back to this email. you know, the -- just looking at it here, the audit, as you quoted, the spca
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warned to avoid lender audits, and to avoid lender audits we encourage direct forgiveness portal being utilized. i am paraphrasing. didn't that -- it wasn't really written like a small business advocates. what was your thought? what were your and colleagues thoughts when you receive that language? >> we hoped to have all our loans forgiven through both rounds for the end of the year. so personally i'm not overly concerned about being audited, they're not going to find anything if they come in. no one wants to get audited, of course, by the spca. so it didn't sit well with me, especially as we had been working so hard on forgiveness for our customers. >> i would agree. if i was sitting here seeing that. i just think it's clear that the portal for direct forgiveness must remain an option with no perceived or
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implied penalties whatsoever. what soever. and certainly we need to maintain a high level of integrity to the program. with that, madam chair, i yield back. >> the gentleman yields back, i don't think there are any other members. ... >> madam chair, i'm here, representative houlahan. >> representative kenny as well. >> yes, i can see you. i recognize the gentlelady from pennsylvania, ms. houlahan. >> thank you madam chair, thank you for joining, us i just have a couple of questions.
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my first is form is ward. i know in your written testimony you said there was a need to alleviate unnecessary paperwork burdens for small businesses. and you said that the need should be expanded to simplify forgiveness applications, for loans up to and including 350,000 dollars. could you give us some more information about attempts for that? and when we may see simplified forgiveness applications? for those from 150,000 dollars to 300,000 dollars? >> yes i think we will see a simplified process for small businesses, that would be helpful. i think expanding that and [inaudible] . there could be a lessening of the burden of documentation.
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and all of that documentation does not have to be reviewed and gone through with the lender and borrower. [inaudible] to ask for documentation if they choose. but sending that out, we think would make this process easier. we think that is appropriate. i'm sorry, go ahead. >> do you have an appreciation or estimate for how many of the total number of loans that would represent in this amount below? >> i think i shouldn't speak to that because i probably don't have the right numbers in my head. i've seen loans go up to 350,000 dollars, however, who are getting over 90% of loans that have been made through that process.
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[inaudible] and their agency resources and other resources to folks on the hire list, to make sure that that documentation, supporting invoices, and that documentation is reviewed. for that amount. >> thank you very much. my final question is for ms. bilonick. i was hoping you'd be able to elaborate and articulate on how the sba can continue to improve the forgiveness process, for those underserved borrowers, those who may not have attorneys or accountants. what else can be sba we doing to improve that process for them? >> if i could give my wish, i would say that, support for those organizations who are funneling them through the portal. i think small business nonprofits in the communities that my organization represents, they are not just giving folks,
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look, here is a website for the portal. they are really talking through and providing support to the borrowers, to be able to understand what is being asked. and to help them upload documents, all of that. it is really not a hands free situation. so we need more resources to support that extra labor, i think that would be wonderful, to help during the pandemic to do whatever is necessary. and that that is being provided. with resources to back it up. so if there is any help with that, at a higher point, the district offices being in line for communities to ask questions and final any doubts. that would be very helpful to have. rather than looking at
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[inaudible] because each loan is so particular. so it's really challenging to have one set of rules that applies to one set of people. and then just really quickly, i wanted to respond to this thing about raising it up to 350,000 dollars. it's an increase of 7.7%. >> thank you, i really appreciate that. with that i yield back, madam chair. >> the gentlelady yields back. and now i will recognize the gentlelady from new york, congresswoman tenney. >> thank you madam chair, and also thank you to ranking member luetkemeyer. i appreciate you holding this important hearing on ppp. it's been a lifesaver for my community. small businesses drive the economy in my region. and we are so grateful that we have been able to have this
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program. and how effectively it was done through our small community banks and credit unions. and i know that working with our credit unions, as a former bank attorney,, and also as a small business owner, how critically important it was for us to have access to these unfortunately dwindling numbers of community banks and credit unions. and to build relationships with them. and that's why i am very concerned about the letters that were received, somewhat threatening letters from sba to the email, from sba, to avoid audits and encourage them to move to the direct forgiveness program instead of working with their own institutions. where they had originated to the loans. and had the community banks, had a community relationship with the lander, in the business community where they know with the risks are, they
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know the community needs. and they also understand the business community. my first question i would like to direct to mr. fischer. i am so grateful that he is on, a frequent guest, and a great expert on this issue. also our president of the independent community bank association, congratulations for that distinction as well. i know you've been asked this. i want you to give us some more detail on the implications of the coercive letters or emails that you received from spca on encouraging your business customers and your businesses to move over to the spca portal. as opposed to using your bank and your system as the forgiveness site. because i'm concerned about the privacy concerns and the reliability of the bank, in giving out that information. could you maybe address that, mr. fischer? >> i am not sure about the
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liability issue. but as far as this, we have systems in place, and we are working with all of our ppp customers. on forgiveness. we work with them, and back to one of the previous questions, i think the easiest way to have customers that are having difficulty with ppp forgiveness, if you go to a community bank they will happily walk you through the process. even if it's not a role, will help you figure it out. but being coerced and having to work through a direct forgiveness portal with the spca? i think that's problematic. they are not going to get the same level of service that they will get coming to my bank. and we know the customer. we have worked here, we work with them. and so it's concerning that we are being coerced to go down that path. and sending our customers directly to sba, without having an interface that they can work
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through with us, and give us solutions. >> and as fellow new yorkers i'm always concerned about when the government is interfering in these relationships. and you described it so eloquently, the importance of character landing and community bank relationships. those have been vital to many in our community, who rely on those dwindling number of community banks, who provide such a great resource to so many, whether farmers or another kind of small businesses, restaurants, a nonprofit that you described that was getting ppp loans. those businesses are vital. and as a member of the community, you understand that. it's not like they [inaudible] . and there's a bureaucracy in washington to interfere with that process. that concerns me. and i think the efficiency that you pointed out earlier, in the ppp program, of abusing the community lenders, that's really about a condemnation. that is a good move.
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and less reliance on the bureaucrats in washington and more reliance on the people closer to our community. i appreciate those comments that you made. i also echo the comments of my colleague mr. stauber. my colleagues in many of us have come to conclusions about the concerns and the problems that they face with the spca. so to me, the fact that we have wonderful institutions like community banks, community credit unions that serve customers are directly. i think that's a huge win. and the idea that they were using any kind of coercive tactics, i'm against that, and so i thank you for your testimony. you have zero fraud and 100 percent forgiveness rate. you are working through every one of these. so that's really important to know about the accountability ethic of this as well. i don't have much time i have left but i just want to have a quick question to ms. pain
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about the consequences of this, some of the consequences on the credit union side. can you quickly tell me that i? think i'm running out of time. >> there is a direct quote from one of our members, about being directly forgiven. this is from an email. ultimately, you are here to [inaudible] thank you so much this has been enormous relief. this is important to us. responsiveness and empathy to really find time to help us with second to nine. thank you very much, that's a critical piece here. >> thanks very much. that's fantastic. and i don't need me to disrespect, there are many great people who work for sva, but you want to ground where with the customers, you depend on people and they depend on you and i think the last thing we need is washington bureaucrats who don't care about that. and i think this is a bit of mission creep for the sba, to
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move away from their job of helping small businesses get to a banking relationship, and interfering in that important relationship. and i think this has been a great program. and to end it, interfering in the ability to give these loans, as mr. fisher referred to in his testimony, that would be a mistake. and i think that's going down the path of accountability, particularly with people like small business and community banks, community credit unions, you have some skin in the game. and that's why you are so good at doing this. and that's why the program was so successful. i want to thank all of the witnesses and everyone. this was really important. i hope we continue to work hard and work on this with you, we are grateful for you. thank you so much madam chair and ranking member luetkemeyer, i yield back. >> the gentlelady yields back. and now we recognize the gentleman from minnesota.
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>> thank you madam chair and thank you to our colleagues and witnesses, i'm grateful to be with you. my question concerns many things, relative to the ppp program. and the washington center for equitable growth indicated that community banks take about 18 million dollars in fees that were associated with applications. i'd like to hear from you, whoever wants to begin, to describe the bank fee structure that was implemented through ppp to provide the incentives, the issue of the loans, and why do you think that in part at least, that this explains why some of the largest lenders were reluctant to do forgiveness. any thoughts from any of our witnesses on that subject? >> i'm happy to take some of these. i can answer that. so first i would say i am not
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aware and would be surprised to see lenders that abuse the process. i had not heard that, that surprises me, if that is happening. sba should be requiring [inaudible] . the fee shock sure that we put in place, really initially, i think it was a collective effort to ensure that businesses had access to funding. and because congress structured it with the largest percentage is getting the smallest loans, unfortunately using the larger percentage, a 5000-dollar loans, that complicates the reimbursement. some lenders that were able to
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get the largest ppp loans, could generate marginal fees for [inaudible] . for community lenders, primarily it's the smallest lenders that [inaudible] . they could get some help from sba trying to cover their cost. [inaudible] we were able to work with them for their loan. many of these were 55,000 dollars or under. but because you are helping some of the nonprofits in the community, we were helping the larger companies help employees be on staff. we had real concerns about the structures from community lenders, that were working
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almost exclusively on loans. and congress should address that. by putting in a minute on [inaudible] . >> appreciate that. ms. payne, any perspective on the same question you want to share? >> absolutely. i'd like to add that going into this, during the pandemic, i don't know that for us, it was member based. we need to help our members. the fee structure was basically secondary. we need to get the fees to get together. and get to our member base. >> i appreciate that. and before my time expires, i know that a number of borrowers were contacted by their banks, saying they received more than their allowable funding, and have to pay back, of course, despite having in many cases to used the funding for forgivable expenses. so i would state you think it was appropriate for that to be
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communicated to borrowers? is that the lenders job or the spca? any thoughts on that subject? >> i can jump in and try to answer. i don't know about the guidance, whether that may have been a good time, it's hard to say. but i think from the beginning, the message to borrowers was, if you look at the right way, you will be forgiven. and i think that's the message that so many of us heard. the boy always did, which was temporary. i think it depends, for us, on getting that message, when it does happen, we are happy to hear that. [inaudible] we want our employees to explain to our borrowers. and give them the help they need going forward with that. >> with that i yield back, and i thank the member for being
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with us today. >> the gentleman yields back. we will now hear from the gentleman from new york, mr. garbarino. >> think you chairwoman and thank you to the ranking member. and next to our witnesses here today. appreciate your testimony so far. i want to start with mr. fisher, sort of a follow-up to what others were talking about. you had been dealing with customers looking for forgiveness. through the processing application and whatnot. have you come across any small business customers that have opted -- that have now adopted, rather, to seek forgiveness? >> we've had some customers that are slow to seek forgiveness. but no, they all want to get forgiven. it shows that some are quicker in trying to apply for it and others. >> and is that the same for you
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as well, ms. payne? >> we are seeing some, not many at all. some have opted not to apply for forgiveness. the only answer that we've heard from them is that they know that they have not spent money in line with the ppp guidance. and that's all i will really say on that. >> so they may not qualify forgiveness. so mr. fisher back to you. how much staff have you dedicated to working on ppp forgiveness? >> initially, it was kind of all hands on deck. you may have 100 full-time employees at the bank, we thought we had 20 people who are working around the clock. weekends, trying to get ppp applications to the spca. in the forgiveness phase we have automated some of that.
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so we are only using about two to three people to handle the forgiveness phase. it's been pretty effective for us. >> and ms. pain, your organization? >> it's similar. we actually brought on others to help us through the ppp forgiveness process. >> okay. and finally, you know, ppp was begin getting finding out the door initially. it was a big question for employers, and ppp was a big help. but this question is for ms. payne or anyone. what are you hearing now? what concerns are you hearing from small businesses now? >> i think the big concern right now is what is going to happen with this next wave, it
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is going to lead to shutdowns? we are seeing mask mandates for schools and things like that. but i still think there is a lot of uncertainty with business, which is always problematic. >> uncertainty over the regulations? i don't think there will be, but there could be another shutdown? >> yes. >> i was just going to add, from our perspective, there's a lot of discussion around [inaudible] . so there is not available workforce for a lot of the industry. and workforce to reopen and reboot. that's something that is coming up very frequently. >> i for that a lot from every industry, i think. construction to restaurants, manufacturing to retail. everyone is having trouble right now finding workforce. but as for programs, like ppp, is there something we could do better next time?
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if there is another shutdown? what should we address in how this program ran out? how the program compares, what can we do better? >> for anyone? >> i would say that we have a template now, will we have a lot more clarity and improvement. one of the biggest challenges is that there are almost daily changes coming through for the programs. and sometimes it's impossible for borrowers to feel that they understand. so that would be an improvement. firms could be -- there could be other ways to deliver these to borrowers. i think that the banks, cdfi's, finn tech's, with forwarders --
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we could allow these funds to be funneled through, get out the door more quickly. having clarity, at least from the beginning, and having clear steps of improvement, delivering on that promise, as to whether you will get these funds forgiven. after you've kept your staff on, those are some of the things i think that could be addressed to help more businesses and hopefully never have them go through something like this. >> thank you, my time is up, thank you chairwoman. >> the gentle meng leads back. and now we recognize the gentlelady from california. >> thank you. thank you chairwoman. and thank you ranking member. i also want to thank the women here today. we've heard a lot from
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colleagues about how the ppp is giving tremendous assistance in allowing -- it's been like-minded for them to weather the downturn, caused by the covid-19 pandemic. and to be shut down. we are talking about a space of ppp forgiveness. the massive effort of contributing close to 12 million ppp loans, close to 60 million jobs, it could not be possible without partners like banks and credit unions. so i want to thank them and their partnership. that they have had. but i was troubled, to hear that sba was threatening -- excuse me, i was really troubled to hear that spca was threatening lenders to opt into the direct forgiveness program to avoid audits by the office of management. and later they clarify that
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audits were focused on lenders that had yet to accept forgiveness for 2021 ppp borrowers. and those who are not actively reaching out, the damage has been done. and sba must not vilify lenders going forward. i also must stress, that whether our bank or any other lending institution deals or not with the forgiveness program, it has no bearing on were always opportunity to have their loans forgiven. many banks and lenders have already set up their own forgiveness platforms that are complimentary to sba. and have been really highly efficient. so let me ask you, mr. fisher, i agree with your testimony that the spca should not support lenders you opt into the direct forgiveness. and with the number of review requests from the sba which requires lenders to put
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resources aside, what should we expect if sba decides to proceed with auditing these landers on top of all of these requests? and how does that spar with your attention for helping these lenders? >> i think it takes resources away from helping our community and customers, in helping small members. and trying to provide documents and deal with auditors from sba. that just becomes problematic for us. >> and mr. fisher, you also said in your testimony, you mentioned the sba lending programs. seven a and five out for, they rely bank underwriting an expertise for approval. what would change if sba moved in the direction of direct war were programs? >> obviously, if you leave the
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bank out of it, you are subject to potentially more fraud. i think that's been brought up. the idle advance, it saw substantially more fraud in direct loans. so i think looking at it from a standpoint of trying to we do see fraud, i think you utilize your existing relationship with community banks. and continue that lending through the five or four program, even ppp was very successful. and i think-limited fraud by using the banking framework we have. >> well thank you so much. i think the biggest concern we have is the impact, and we want to make sure that there is a prevention of waste, fraud and abuse with this program. one more question. and then i will direct this to ms. payne. why do you believe that the forgiveness review process by the s va is challenging?
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are there certain steps that adds extra days to the review? >> these steps have gone under review. it is a time consuming process. because it's not always the case that the lender has a direct communication with the spca representative. they are asking for additional documentation, sometimes they have to be re-uploaded, sometimes we are repeating ourselves. then we have to reach out to the borrowers, sometimes not understanding what has to go in for the loan itself. so it also adds frustration. and stressed for the border were, asking, why am i under review? so it can add stress to the process. >> i have another question to ask but i think my time is up,
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so i will yield my time back, thank you. >> the gentlelady yields back. i recognize the gentlelady from texas, congresswoman -- >> as a driving force behind our economy, nearly half of all american workers have expenses. while government shutdowns forced many businesses, the emergency capitol needed to keep doors open, after providing almost a trillion dollars, there is a massive relief program shutting down and. i want to echo congressman hagedorn requests and express
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my composition disappointment that we are discussing this without an sba representative present. there are questions that can only be answered by someone with expertise in those programs. so i hope that this can be answered by sba very soon. mr. fisher i appreciate all the work you do in upstate new york. i had an account with your bank that i was a college student. i know it's raining here today, but now is when i want to be there because, in dallas it is 100 degrees. so enjoy your summers and your fall, because winter is coming soon! so i do have a question for you. despite potential setbacks and concern about fraud, the ppp program successfully assisted businesses during the pandemic. as you look ahead to the next major disaster, there may not
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be an into ppp. i know there had been a similar question asked. how can we improve the ppp model to disperse the quickest aid but also minimize fraud? >> i guess i would suggest not trying to give directly to the borrower. i think utilizing the direct network of banks, direct utilizing banks that have participated and have a long history of seven day lending, it's actually probably the way to go. because we have relationships with those businesses. we know the businesses just down the street. i drive-by it every day, versus someone who is just seeing it in an application on paper or virtually and trying to make that decision. i think that can be agreed, mutual aid to help get those dollars out, that will help curb fraud. >> that's good to know. in your testimony you state
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that when the pandemic hit, that latino owned businesses have hit a record breaking stride, with their average revenue increasing by 10%. 125,000 dollars a year. i had some questions around the exact type of growth strategy we are looking for. what would you attribute that success to back in 2019? >> i think that success reflects the feeling of latino small businesses. so we are going to the next level. unfortunately the pandemic is a setback. but there is a mentality [inaudible] and it's hopefully just a hiccup in the story. >> were there any particular policies that you think helped back in 2019, that we should
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either try to strengthen or bring back? >> i don't know if i would point to a particular policy. i'm not sure. i think it's just the majority of the businesses. but i am open to suggestions of what policies you may be pointing to. >> texas? we are looking at the tax tests in texas. that as an indicator of health. i know the biden ministration has looked at the number of policies. so in backing when some of the policies, i think it would help the economy. and be very positive. i'm just wondering if you are seeing the same thing. >> i don't know if i would reduce it to that.
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i would say i'm not [inaudible] i think under 1 million dollars is certainly not targeted in that segment. >> no, i don't think that specifically in those small businesses. i guess it would be probably closer between the 250,000 dollar and 300,000 dollar range. thank you i yield back my time. we recognize the gentleman from florida, mr. donald, for five minutes. >> thank you, madam chair. and thank you to the ranking member for holding this hearing. i got to tell you, i think s.b.a. getting involved in -- as involved as they're trying to be with this forgiveness process and frankly, you know, threatening community banks from doing what they've already -- to do is outrageous. it's outrageously wrong. and a prior life, i was a credit underwriter at a community bank. i had to deal with s.b.a. when
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we were doing joint credit with them. and to be frank, s.b.a. would be late to the table often with respect to their lending decisions. but we already knew it was -- it just took forever to deal with s.b.a., for them to come in now and in some respects completely take over the forgiveness process to me doesn't make much sense at all so -- my question -- first question for mr. fisher, and you guys are going through the process of forgiveness, what kind of data are you looking at in order for forgiveness? >> we just make sure that it's a valid loan. we validated all the customers at the front end so the forgiveness we just have to ensure that they have all the documentation required by s.b.a. and it goes through -- we have an automated system that it goes through and submits directly to s.b.a. and we typically right now we're getting forgiveness back very quickly from s.b.a. so a pretty smooth process for us
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right now. >> ok. and ms. ward, my question for you is what difference -- what different or what value added is s.b.a. bringing to the forgiveness process to why they should be involved? >> i think the value s.b.a. is having is creating this direct for business portal they're giving an easier, more efficient online access for some p.p.p. borrowers that may not be getting that from their lenders. and in that case that is incredibly valuable. and happy to see that they've created the portal to fill that gap. i agree for lenders that already had created their portal, and that are efficiently processing p.p.p., it should be allowed to keep using their own systems. and s.b.a. direct portal should expand that access to forgiveness and not limit different ways that borrows can get forgiven. and as an s.b.a. lender eve
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worked with microloans, now p.p.p. loans. and s.b.a. works best in my opinion when it works in partnership with the lenders. each has their role. and s.b.a. can have draftically more impact working through the lending community. that means it can be expanded and more community lenders, lenders that are making sure to hit one of their served borrowers but that is where i think s.b.a. provides incredible and unique service and much needed, s.b.a. loans of all type why the u.s. has such a vibrant small business economy. >> a follow-up to that. like i said, somebody who has been a -- done credit underwriting, with the amount of loans in the system, how would
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s.b.a. act -- absolutely go about dealing with loans that there might be early indications are fraudulent or that dollars were spent not in line with the p.p.p. program? and as such, those dollars -- a portion of those dollars, those dollars overall would not be forgivable, how would s.b.a. deal with that? >> what we've seen that process improve since the program got rolled out. i think initially in the speed to get these dollars out, allow the normal -- >> to reclaim my time real quick, i understand what you're saying but from now going forward, what frankly special mechanism is s.b.a. going to do if they see early warnings that there was -- not so much even just fraudulent but a misapplication of funds where those funds are now no longer subject to forgiveness under the various -- and there have been a couple alliterations of p.p.p. what if those dollars were not
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spent in any of those iterations and what is s.b.a. going to do and -- to make sure those dollars are repaid to the taxpayer? >> of all of -- s.b.a. final determination, the banks, the lender, and that recommendation for s.b.a. based on does this loan qualify for forgiveness or partial forgiveness. and s.b.a., forgiveness on that. s.b.a. also has the right to review those and ask for additional documentation. and so they'll keep doing that same thing. they'll continue to review and make sure that forgiveness is appropriate if the funds were not spent for the intended purposes, the business should be paying them back. the -- to keep your business operating and keep your staff in place, businesses that didn't do that should be held accountable
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for paying that back. >> thank you for that. and i know i'm over my time and thank you for the indulgence and i yield back. >> thank you. the gentleman yields back. and let me thank all the witnesses for being here today. your testimony has shown the progress we have made in forgiving p.p.p. loans and also the challenges that small businesses still have. >> madam chair, we got one more witness or one more member, mr. fitzgerald, from wisc onmadam chair, we have one more member, mr. fitzgerald from wisconsin is still on. >> madam chair, i'm not sure. i just had a quick one, if i can sneak in. >> sure. we have always said that while you are in a hearing please keep the video on. sir, you are recognized now for
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five minutes. >> thank you. real quick, and i don't want to be redundant, and i know the hearing has gone on. to mr. fischer and probably to ms. pain, there are kind of these stories that have been swirling up for sometime now that there was kind of this cottage industry that was created basically because ppp loans were available. there were accounting firms as well as law firms that were starting to market, if you will, and i'm trying to keep this at a high-level, market the idea that hey, if you want to apply for a ppp loan, don't worry about it, we will take care of the paperwork. this is what you are eligible for, and then once the ppp loan was granted, then on the back end, there would be legal fees
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that are charged, or certainly with some of the cpa firms. there were buildings that were done on the back end. i bring this up, and like i said, i'm not necessarily making the accusation, but it's out there. it is very much out there. this is one of the problems with loan forgiveness you once again take down one of the hurdles that otherwise legitimate businesses would look at and say, wait a minute, i've got to pay this back in the end, the no, i won't take the 25,000 dollar loan. i won't take it, because it will be a burden on me later. but if i know it will be forgiven anyways, sure, what the heck. let's make the arrangements now and suddenly, you find yourself in a bad spot.
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i'm just worried that this cottage industry was created. i wonder if you have any comments on that, if you saw this type of practice going on. in my mind it sounds like criminal activity, but it's very hard to define and very hard to nail down. i would ask either one of you who had direct involvement with these loans if you have seen anything like this. >> we did have lawyers working with customers but they were all customers where we brought in 40% of the first round of ppp customers to our bank. those were not referrals from attorneys or accounting firms, but borrowers coming to us
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directly. we had a couple accounting firms that thought they were entitled to some of what was being generated by the ppp loan but we didn't have any type of agreement signed with them for those fees. we didn't really see anything that you are talking about in terms of the type of activity you are talking about i haven't seen that. >> i would add, we talk more to accountants about forgiveness then the complexity sometimes of the application they had to provide for forgiveness. >> are you aware of anything along those lines?
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>> i think -- payroll processing companies to help them calculate claudette. different industries are helping. i suspect you are right that there are organizations that took advantage of that fear to the extent that they can be found out and held accountable for that, i think they should.
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there are organizations trying hard to help them keep their goals open. >> i am just worried, madam chair, that this is something we have to be aware of and i appreciate that, thank you. >> thank you. >> again, thank you to all our witnesses for being here today. your testimony has shown the progress we have made in forgiving ppp loans and also the challenges small businesses still face. while the small businesses have made tremendous progress towards recovery over the past 17 months, we are entering another precarious stage with the threat of the delta variant. small businesses have struggled for over a year. that's why our committee must work to ensure that small businesses can achieve maximum
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loan forgiveness. these hearings have provided significant insight into the challenges that ppp will still face. i look forward to achieving solutions of the forgiveness they are entitled to. i will ask unanimous consent that members have five legislative days to submit statements and supporting materials for the record without objection. there is no further business to come before the committee. we are adjourned. thank you.
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-- and her states response to the coronavirus pandemic. she spoke at an event hosted by the hoover institution, moderating the discussion with dr. scott atla

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