ICBA Chair: SBA is Coercing Lenders into Using PPP Forgiveness Portal

A community banker, at a hearing before the House Small Business Committee on Wednesday, accused the Small Business Administration of attempting to coerce lenders in the Paycheck Protection Program into using an agency portal for loan forgiveness.

“On Monday, we and other PPP lenders received an email from the SBA informing us that to ‘avoid lender audits’ we are ‘encouraged’ to opt into direct forgiveness,” Robert Fisher, president/CEO of the president and CEO of Tioga State Bank in Spencer, N.Y. told the committee. “We resent the coercive tone of this email.”

Fisher is the chairman of the Independent Community Bankers of America.

The topic of the hearing was the PPP loan forgiveness program. Witnesses discussed the direct portal established by the SBA in August which allows borrowers of $150,000 or less to directly apply for forgiveness from the SBA. Lenders had to decide whether to opt into the process or use their own forgiveness process.

Leslie Payne, assistant vice president of Commercial Lending at the Affinity Federal Credit Union in Basking Ridge, N.J, testified at the hearing on behalf of the National Association of Federally-Insured Credit Unions. Also testifying was Tracy Ward, director of the SBA 504 Loan Program at the Self-Help Ventures Fund. That group is affiliated with the Self-Help Federal Credit Union in Durham, N.C.

The hearing did not feature a representative from the SBA.

Republicans on the Small Business Committee hammered the SBA for the audit threats and questioned whether the agency should have established the portal. “We want to hold the SBA accountable for outrageous statements like this,” said Rep. Blaine Luetkemeyer, R-Mo., the ranking Republican on the committee.

The credit union witnesses expressed frustration with the SBA, but did not address Fisher’s accusation.

“SBA did outstanding work to get an entirely new loan program of this scope up and running within approximately two weeks of Congress creating it; nevertheless, the initial rules for the program were incomplete and confusing,” Ward told the committee. “Rules for microbusinesses were especially unclear and changed regularly throughout the time PPP loans were available.”

She added that “Many of these changes were issued by SBA late at night, and in almost every case, were effective immediately upon issuance, rather than following the standard 30-day delayed effective date under the Administrative Procedure Act, and in the case of significant changes, the 60-day delayed effective date for major rules under the Congressional Review Act.”

Payne also expressed frustration with the SBA forgiveness process. “During the forgiveness process, a primary source of frustration for credit unions has been the SBA’s ongoing requests for additional documentation for loan forgiveness applications under review, regardless of loan size,” she said.


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