May 01, 2020

Harris Demands Answers On Administration’s Failures To Support California Small Businesses Amid COVD-19 Pandemic

WASHINGTON, D.C. – U.S. Senator Kamala D. Harris (D-CA) on Thursday sent a letter to Treasury Secretary Steven Mnuchin and Small Business Administration (SBA) Administrator Jovita Carranza expressing “great concern” about the administration’s failure to provide assistance to California small businesses and demanding answers. Earlier this month, Harris and Senator Dianne Feinstein (D-CA) called on the Treasury and SBA to investigate the large disparity between California and other states in the distribution of Paycheck Protection Program (PPP) funds.

“California’s businesses are continuing to struggle and are looking to the federal government, in particular Treasury and the SBA, to help them weather this crisis,” Harris writes. “It is particularly frustrating for businesses that were unable to secure a PPP loan to hear that large sports organizations, and publicly-traded companies may have been able to secure more than $500 million. Adding insult to injury, there have been technical problems, particularly for smaller community banks and credit unions, preventing small businesses from successfully applying for assistance. This delay is unacceptable. I need a clear accounting from the agency on how many California businesses actually have gotten assistance.”

Harris continued, “Many businesses in California are hurting, and I am gravely concerned that your repeated failures to provide them with the financial assistance they are entitled to endangers their ability to stay in business. With an additional round of small business funding that will soon be depleted, I ask you to provide clarity on how the SBA plans to resolve the several issues raised in this letter and how it will ensure that businesses in California receive its equitable share of relief.”

A copy of the letter can be found here and below.

April 30, 2020

The Honorable Steven Mnuchin

Secretary

U.S. Department of the Treasury

1500 Pennsylvania Ave., NW

Washington, DC 20220

 

The Honorable Jovita Carranza

Administrator

U.S. Small Business Administration

409 3rd St., SW

Washington, DC 20416

 

I write with great concern that small businesses struggling amid the coronavirus pandemic are still not receiving the financial assistance they are due according to recently passed legislation. On April 17, 2020, Senator Feinstein and I sent a letter calling your attention to the fact that, according to an analysis in The Wall Street Journal, California received the fewest number of Paycheck Protection Program (PPP) loans per small business (58.5) of any state. Given that there are 3.9 million small businesses in California and that those businesses have been closed due to stay-at-home orders longer than those in other states, it is confounding that California businesses have not qualified for more assistance.

In the previous letter, we requested you review the potential explanations for that disparity in PPP funding and respond with any statutory changes that are needed to make the program more equitable. You have both failed to respond to this urgent request. My subsequent attempts to get concrete information about credit flowing to California businesses have demonstrated that the SBA regional staff cannot or will not provide this vital information. Meanwhile, California’s businesses are continuing to struggle and are looking to the federal government, in particular Treasury and the SBA, to help them weather this crisis. It is particularly frustrating for businesses that were unable to secure a PPP loan to hear that large sports organizations, and publicly-traded companies may have been able to secure more than $500 million. Adding insult to injury, there have been technical problems, particularly for smaller community banks and credit unions, preventing small businesses from successfully applying for assistance. This delay is unacceptable. I need a clear accounting from the agency on how many California businesses actually have gotten assistance.

Many businesses in California are hurting, and I am gravely concerned that your repeated failures to provide them with the financial assistance they are entitled to endangers their ability to stay in business. With an additional round of small business funding that will soon be depleted, I ask you to provide clarity on how the SBA plans to resolve the several issues raised in this letter and how it will ensure that businesses in California receive its equitable share of relief.

I ask you to specifically answer the following questions:

  • How many California small businesses have applied for assistance through the Paycheck Protection Program (PPP) dating back to April 3, 2020?
  • Of those businesses that applied, how many have been given a loan?
  • What is the average size of the businesses that applied? Please provide a number both in terms of employee size and in terms of the asset size of the business.
  • What is the average size of the businesses that secured a loan? Please provide a number both in terms of employee size and in terms of the asset size of the business.
  • How many California small businesses have applied for assistance through the Economic Injury Disaster Loan (EIDL) program dating back to March 2020?
  • Of those businesses that applied, how many have been given a loan?
  • What is the average size of the businesses that applied? Please provide a number both in terms of employee size and in terms of the asset size of the business.
  • What is the average size of the businesses that secured a loan? Please provide a number both in terms of employee size and in terms of the asset size of the business.
  • How does the SBA plan to ensure that California businesses are receiving a proportionate share of the PPP funds given the large number of small businesses operating in the state?
  • How does SBA plan to ensure that all small businesses receive relief that it needs and that small businesses with public or other forms of financing are not the primary recipients of PPP loans?

Given the urgent nature of this crisis, I ask that you provide answers to these questions no later than Tuesday, May 5, 2020.

Sincerely,

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