A congressional report released last week provided evidence that the Treasury Department had advised banks to focus on existing customers during the early days of the Paycheck Protection Program, a finding that the Treasury Department denied.

The House of Representative’s Select Subcommittee on the Coronavirus said that the Trump Administration and many big banks did not prioritize small businesses in underserved markets during the U.S. Small Business Administration’s launch of the PPP, leading to obstacles for these companies during the economic crisis.

The subcommittee’s conclusion adds to previous reporting related to the struggles small businesses encountered at the outset of the PPP.

The report includes a copy of an email sent by Rob Nichols, president and CEO of the American Bankers Association, to the ABA’s board of directors on March 28, the day after the CARES Act was signed. In the email, Nichols said that the Treasury Department wanted “banks to go to their existing customer base” when processing loans, adding that lenders would already have the business information, including payroll, for these customers.

A representative from JPMorgan corroborated this account in a meeting with the subcommittee, according to the report, but the Treasury Department told the subcommittee that it had “never addressed anything about lenders prioritizing existing customers.”

Without referencing the email to the board, Nichols issued a statement Friday saying that the report “fails to capture a full and complete picture of the PPP program and the banking industry’s significant efforts to make it a success.”

“Working with the federal government, banks of all sizes worked day and night to get the Paycheck Protection Program off the ground in the middle of a pandemic,” Nichols said.” The size, scale and speed of their response was unprecedented, delivering more than $500 billion in PPP loans that have allowed struggling small businesses affected by COVID-19 to survive, helping to save tens of millions of jobs.”

Nichols said banks had been encouraged by the administration from the beginning of the program to process loans for new and existing customers and to start processing them “as quickly as possible to support the deteriorating economy.”

Many banks processed applications from existing borrowers first, Nichols said, because they had the borrower information needed to meet regulatory requirements.

“As a result of this immediate action by the banking industry, thousands of small businesses from every region of the country were able to keep their businesses open and continue paying their employees,” Nichols said. “Over time, as the Treasury and SBA provided more clarity, it became easier to gather information to process new customers in this new program.”

The subcommittee’s report also found that the SBA and Treasury did not issue guidance for lenders to prioritize underserved markets and processed loans for wealthier companies at a faster pace.

While Congress has not yet agreed on another round of PPP lending, the report recommended that the SBA and Treasury provide detailed guidance for prioritizing underserved markets, including minority and women-owned businesses, if another round of PPP lending is authorized.

The report also recommends that the SBA and Treasury work with Community Development Financial Institutions and Minority Depository Institutions to ensure they have the resources to handle demand for PPP loans.

The subcommittee also said the administration should collect borrowers’ demographic information. The Treasury department had omitted this from the application, typically collected by the SBA, a decision that was “driven by speed and simplicity,” the report said.

“Unfortunately, the Administration’s decision to only capture demographic information at the loan forgiveness stage makes it impossible to determine conclusively the extent to which businesses from underserved markets, including minority and women-owned businesses, may have been excluded from the PPP at the application stage,” the report said. “If PPP is extended, the Administration should add a demographic questionnaire to the application form.”