Credit unions continue to express frustration with the Small Business Administration, contending that they are unsure about how to solve the serious problems they are facing in implementing the popular Paycheck Protection Program.
“Unfortunately, as was expected, the compressed timeframe in which the PPP was enacted and implemented resulted in many challenges for our member credit unions in making, processing, and disbursing loans,” Lance Noggle, CUNA’s senior director of advocacy and counsel said in a letter to SBA officials. “Questions and concerns have morphed as the program is now almost 45 days old.”
NAFCU officials expressed similar frustration. “The SBA must provide guidance on the forgiveness application for borrowers, how they must calculate forgiveness, the process to submit those applications, timeframes for when applications must be submitted and approved, and the necessary documentation required for lenders to make a determination,” wrote Kaley Schafer, NAFCU’s regulatory affairs counsel, in a letter to SBA officials.
Today is the deadline for comments on the agency’s interim final rule governing the program, which is designed to make loans to small businesses to keep employees on their payrolls during the pandemic crisis. The interim final rule was used to allow the federal government to immediately start approving loans. Under the federal regulatory process, the SBA is soliciting comments in anticipation of issuing a final rule.
The loan program was quickly cobbled together by Congress and the Trump Administration. Credit unions and others have documented their problems with the loans. In addition, critics of the administration’s management of the program contend that large lenders were able to quickly process loans for preferred customers.
Officials from the Illinois Credit Union League and the Ohio Credit Union League said the SBA must be more specific in its rules and state that all credit unions, whether state or federally chartered, are eligible to make PPP loans.
The SBA should go even further, according to Dennis Adams, president/CEO of American Share Insurance, a credit union-owned share insurance fund. He said the SBA should make it explicit that privately insured state credit unions also may make PPP loans.
Schafer said the SBA rule should have been more explicit in stating that credit unions would not lose their SBA certification if documents submitted by a borrower proved to be incorrect. Finally she added that credit unions are unclear about the process to be used to forgive the loans.
Noggle said that the possibility of loan forgiveness is likely the driving force behind the demand for the loans but added that the SBA has not provided lenders with the necessary guidance to begin that process.