U.S. Treasury Secretary Steven Mnuchin said Congress should consider automatic forgiveness of the smallest loans made under the Small Business Administration's Paycheck Protection Program (PPP), during testimony Friday in front of the House Small Business Committee.
“We should consider forgiving all small loans, but would need fraud protection,” Mnuchin said when Rep. Steve Chabot, R-OH, asked how the process could be streamlined. Mnuchin, however, did not suggest a threshold that constitutes "small."
Mnuchin's comments come as trade groups, including some representing the nation's largest banks, have called for blanket forgiveness for PPP loans under $150,000.
While the PPP is set to end Aug. 8, the next step in the $660 billion program is loan forgiveness, a process many bankers say will be extremely burdensome for banks and small businesses.
"These small businesses and their employees are the backbone of our nation's economy and communities. Their time and resources would be better focused on getting the economy safely back up and running, not processing burdensome paperwork," the Consumer Bankers Association (CBA) and Bank Policy Institute (BPI) wrote to lawmakers last month.
The trade groups urged Congress to pass legislation automatically forgiving PPP loans of $150,000 or less, a threshold they said would account for 85% of total PPP recipients, but less than 26% of PPP loan dollars.
PPP loans can be forgiven entirely so long as recipients can show at least 60% of the funds were used to pay employees.
The CBA and BPI estimate each forgiveness application would cost a small business $2,000 and take 20 to 100 hours to complete, citing an analysis from AQN Strategies.
Bipartisan legislation that would streamline the forgiveness process by creating a one-page forgiveness application for loans under $150,000 is also gaining support from a variety of industry groups.
More than 130 trade groups, including the CBA and the BPI, wrote this month in support of legislation introduced by Sens. Kevin Cramer, R-ND, and Bob Menendez, D-NJ, saying the bill would save small-business owners more than $7 billion.
Meanwhile, the SBA has yet to open its online portal to receive forgiveness applications. SBA Administrator Jovita Carranza told the House Small Business Committee on Friday the agency anticipates the portal will be ready by August.
Mnuchin told lawmakers there will be a "robust process to review loans before loans are forgiven."
"In the forgiveness process, people will be required to provide much more data, and that data will be released," he added.
The Small Business Administration this month disclosed long-awaited data this month on recipients of PPP loans, but anomalies regarding the number of jobs retained have raised questions about the value of the data.
Discussion around the forgiveness process comes as Congress is considering a new round coronavirus aid.