Credit union trade groups are asking the Trump Administration to automatically forgive the smallest loans made under the Paycheck Protection Program, although they disagree on the threshold for forgiveness.
Citing the complexity involved in filling out the loan forgiveness application, the Credit Union National Association is requesting that the Treasury Department forgive loans under $350,000 without requiring that the borrower submit an application.
The National Association of Federally-Insured Credit Unions also supports the automatic forgiveness idea but said the threshold should be loans under $150,000.
The two groups sent the letters to the Senate Small Business Committee, which held a hearing on the PPP program Wednesday.
“Credit unions are concerned that the recently published application for loan forgiveness is overly complex for most businesses,” CUNA President/CEO Jim Nussle wrote in a letter to the Senate Small Business Committee. “The complexity of the forgiveness process presents an even greater challenge for small business as they have fewer resources to deploy on an overly complex application process.”
Nussle wrote that the $350,000 threshold would capture the vast majority of PPP loans.
In a letter to the panel, Brad Thaler, NAFCU’s vice president of legislative affairs wrote that loans under $150,000 account for 85% of PPP recipients, but only 26% of the funds disbursed by the SBA.
“This level would cover the majority of credit union loans, the vast majority of which have been to smaller businesses that could most benefit from this automatic forgiveness,” Thaler said.
Following the hearing, Small Business Committee ranking Democrat Ben Cardin of Maryland said that he plans to introduce legislation to authorize another round of PPP lending for businesses with 100 employees or less that already have received a loan, but still need funds to keep operating.
“Every business we prevent from failing now, is a business that will be in a position to create jobs during the recovery,” he said.