The Small Business Administration improperly blocked state-chartered, privately insured credit unions from participating in the Paycheck Protection Program, Credit Union National Association President/CEO Jim Nussle charged Wednesday.
“Many of these credit unions never received a response from the SBA and were unable to participate in PPP and offer critical support to their members in time of need,” Nussle wrote in a letter to the House Small Business Committee, in advance of the panel’s oversight hearing for the SBA.
Nussle said that when the PPP was established, privately insured credit unions were inadvertently excluded from the list of institutions that could make PPP loans. Subsequent legislation corrected that.
However, Nussle said that as state-chartered, privately insured credit unions began to submit applications to participate in the PPP, the applications were left idle for months, with the institutions being told that they were “under review.”
He said that ultimately the SBA said that Treasury Department and SBA review teams said that the applications were not approved because they did not meet the requirements of the Non-Federally Regulated Lender definition. He added that the Treasury Department chose not to send letters to institutions the department said did not qualify for the program.
“We believe this was a considerable misinterpretation of qualified lenders under the PPP and urge Congress to hold the SBA accountable for blocking privately insured credit unions from accessing PPP funding to help their members during such a critical time,” Nussle told the committee.
He also said that the SBA has a large backlog of outstanding PPP loan forgiveness applications, adding that under agency rules forgiveness decisions must be made within 90 days. “Despite the Interim Final Rule, businesses and financial institutions are waiting well past the deadline for a response,” he said.
The SBA on Sunday released the latest PPP loan data. As of May 23, 851 credit unions with under $10 billion in assets had made 149,879 PPP loans this year, totaling almost $5.1 billion. The SBA said by that date, eight credit unions with more than $10 billion in assets had made 14,869 PPP loans, totaling $436 million.