Credit unions and their members should rely on the Small Business Administration for information about loan forgiveness in the Paycheck Protection Program and ignore what they are reading on social media, David Hincapie, an SBA economic development specialist told community development credit union officials Tuesday.
Speaking at a webinar sponsored by Inclusiv, the association representing community development credit unions, Hincapie reiterated that the SBA will forgive loan for borrowers who make a “good faith” effort to meet the requirements of the program. He said that includes spending at least 60% of the loan proceeds on payroll to keep workers employed.
“Stop panicking, stop freaking out and stop listening to everything [you] see on Facebook,” he bluntly told those listening to the webinar. He said the SBA is trying to provide clarity to borrowers and lenders.
“Anything else is nonsense,” he said. “It’ll make you crazy.”
During the webinar, Inclusiv officials reported that community development credit unions made at least 16,989 PPP loans, totaling at least $1.04 billion.
Samara Rajan, president/CEO of the Brooklyn Cooperative Federal Credit Union, said that her credit union made 146 PPP loans. She said that flexibility was one of the keys to helping those in her neighborhood, adding that Capital One and Citibank had temporarily closed branches in the neighborhood, while the credit union remained open.
Brooklyn Cooperative has almost 7,400 members and has assets of almost $40 million.
She said credit union officials changed their policy of only approving loans to their members and began accepting PPP applications from non-members. “It was critical to our neighborhood,” she added.
Meanwhile, Accountable.US, a watchdog group on Wednesday released an analysis showing that the ten poorest congressional districts, including one in New York, received far fewer PPP loans than the ten wealthiest districts.
Businesses in the poorest districts received 69,465 loans, while businesses in the wealthiest districts received 126,091 loans.
Many lawmakers have been pushing for legislation that would grant automatic PPP loan forgiveness for loans under $150,000 and would allow a new round of PPP lending. Asked about a new round of PPP lending, Hincapie said, “It all depends on what Congress does.”