The Paycheck Protection Program continues to be plagued by a lack of transparency and unclear rules, Democrats and credit unions said this week.
The Senate passed legislation Wednesday that would allow businesses to use a larger percentage of Paycheck Protection Program loans for non-payroll purposes.
Now that the Trump Administration has agreed to set aside $10 billion from the Paycheck Protection Program for loans made by Community Development Financial Institutions, Democrats are pushing the administration to do the same for minority institutions.
The House defeated legislation Thursday that would have made public the names of lenders making large loans in the Paycheck Protection Program. The bill did not receive the two-thirds needed to pass the measure using an expedited process.
The U.S. House of Representatives is expected to vote later this week on legislation that would disclose details– including the names of lenders– of all loans over $2 million made under the Paycheck Protection Program.
The House also is likely to consider a measure to give employers receiving those loans some additional flexibility in how to use them.
A bipartisan group of senators has introduced legislation that would prohibit the garnishment of economic impact payments that individuals received from the federal government.
A group of bipartisan lawmakers is asking Congress to set aside $50 billion to provide local governments with money to help small businesses recover from the effects of the coronavirus pandemic—bypassing financial institutions that have been criticized for failing to help the smallest businesses with the Paycheck Protection Program.
House Recovery Bill Ignores NCUA Requests for Member Business Lending Boost, Capital Requirements Decrease
The coronavirus relief bill unveiled by House Democrats Tuesday would not increase the credit union Member Business Loan cap or decrease capital standards—two major priorities of the NCUA and credit union trade groups.
The $3 trillion, 1,800-page bill includes about $1 trillion in aid to states and local government, as well as extended unemployment benefits and additional stimulus payments to taxpayers. It also would provide a safe harbor for financial institutions providing services to marijuana-related business.
Amid some opposition from a key Democrat, NCUA Chairman Rodney Hood told the Senate Banking Committee Tuesday that Congress should decrease capital standards for credit unions, as they respond to economic problems caused by the coronavirus crisis.
Hood said that he would like Congress to authorize a temporary reduction in minimum capital requirements—reducing the level at which credit unions are considered well capitalized from a net-worth ratio of 7% to 6%. He said that the level for “adequately capitalized” credit unions should be cut from 6% to 5%.
Democrats are renewing their call for more rigid Paycheck Protection Program set-asides for credit union and community banks, following reports from a government watchdog contending that program funds may not be reaching the neediest businesses.
“Not only did [the Small Business Administration] fail to issue guidance to prioritize the paycheck loan applications of underserved and rural small businesses, the agency implemented a ‘first-come, first-served’ policy that made it harder for vulnerable small businesses to access PPP,” Senate Small Business Committee ranking Democrat Ben Cardin (D-Md.) said, following the release of a report by the Small Business Administration’s Inspector General.