WASHINGTON–The Independent Community Bankers of America (ICBA) told Congress that the Small Business Administration’s Paycheck Protection Program needs a simple, easy-to-use forgiveness process to ensure the program works as intended for small-business borrowers.
Testifying before the House Small Business Committee, ICBA Chairman Robert Fisher said community banks have led PPP lending to small businesses and support a forgiveness process that is minimally burdensome for borrowers so they can focus on preserving their businesses.
“My bank’s PPP lending is typical of a community bank. We made a total of 929 loans for $64.8 million, saving roughly 10,000 jobs,” testified Fisher, who is president and CEO of Tioga State Bank in Spencer, N.Y. “A straightforward, relatively simple loan-forgiveness process with minimal fraud is how the PPP’s success must be measured.”
Fisher said that while ICBA appreciates the SBA’s creation of its Direct Borrower Forgiveness Portal to streamline forgiveness for borrowers with smaller loans, the agency must respect lenders that choose not to use the portal.
And while community banks have experienced little to no PPP fraud due to their robust underwriting, the SBA should proceed cautiously before changing its loan programs due to the higher incidence of fraud among nonbank lenders with little experience that crowded into the PPP, stated the ICBA.
What the Data Show
According to SBA data cited by the bankers’ group, community banks:
- Were the predominant PPP lenders to local small businesses. Their 4.7 million PPP loans worth $429 billion served 55.8% of all PPP recipients and accounted for nearly 60% of the program’s total loan amount.
- Supported minority-owned small businesses. Community banks accounted for the following shares of the banking industry’s PPP lending: 86.9% to minority-owned businesses, 81.0% to women-owned businesses, and 68.9% to veteran-owned businesses.
- Served communities in rural, suburban, and urban America. Community banks made PPP loans in 98.5% of low-income or economically distressed counties, 97% of rural counties, and 93.8% of urban counties.
- Saved local jobs in food services, health care, and construction. Nearly one-third of the jobs they saved were in those critical sectors, and the nearly 49 million jobs they saved accounted for 58.3% of the program total.
- Had fast turnaround times, processing PPP loans five to 10 days faster than other PPP lenders.
Both CUNA and NAFCU have also sent separate letters to Congress urging simplification of the loan forgiveness process.