According to the Government Accountability Office, the Small Business Administration has not conducted a comprehensive assessment of the risks of the Paycheck Protection Program because of the need for a rapid execution of the program. The GAO does not consider this an acceptable excuse and noted that an independent auditor reported multiple problems with the loan program.
The Small Business Administration’s Inspector General has issued a report finding that in the first batch of Paycheck Protection Program loans last year, 4,260 borrowers got two PPP loans when they only should have received one. The SBA intends to not forgive those duplicate loans, but to prevent duplication from happening again, the SBA has added controls that are causing delays and a logjam in loan processing this cycle, raising concerns that businesses will be caught without a loan when the program ends on March 31. The House has now passed legislation that would extend the PPP to the end of May.
Financial services trade groups, including the Credit Union National Association and the National Association of Federally-Insured Credit Unions, are concerned that the Paycheck Protection Program will expire on March 31 with thousands of loans stuck with “holds” that will prevent those small businesses from getting assistance. They want all loan applications received by the March 31 expiration date of the PPP to be processed.
The Inspector General of the Small Business Administration warned that during the earlier Paycheck Protection Program lending, businesses on a Treasury Department “Do Not Pay” list were approved for $3.6 billion in loans. It is not clear how much of the money was actually distributed.
Financial and industry trade groups, including the Credit Union National Association and the National Association of Federally-Insured Credit Unions, would like guidance and rules for the new Paycheck Protection Program issued soon so that there will not be constant updates and changes like those that occurred during the first PPP. The groups sent a letter to the Small Business Administration and Treasury Department, suggesting comprehensive and timely guidance on the program rules so that a smooth implementation can occur.
Financial regulators proposed in October codifying a policy statement that supervisory guidance does not create legally binding obligations. Senator Toomey (R-Pa) doesn’t think that goes far enough.
The Independent Community Bankers of America’s anti-credit union campaign will continue in the next Congress.
In its briefing on the impact of the 2020 election, the ICBA said it will continue its “Wake Up” campaign during the 117th Congress. But the trade group said it does not expect any major policy shift in how policymakers view the credit union industry.
Does agency guidance have the force of law? The National Credit Union Administration, the Consumer Financial Protection Bureau and other financial regulators issue a proposed rule that says it does not.
The trade group representing the nation’s community bankers is asking leaders of the Senate Banking Committee to request a Government Accountability Office investigation of the credit union industry.
Jason Crow, chairman of the House Innovation and Workforce Development Subcommittee, complains of technology-related issues with Paycheck Protection Program loan processing which he believed could have been prevented if the Small Business Administration had properly responded to a Government Accountability Office report from 2014.