WASHINGTON–Credit unions have welcomed news that the latest stimulus package before Congress includes $60-billion reserved for smaller institutions to lend out, but there could be delays due to technology issues.
As CUToday.info has reported, the $484-billion spending and relief package now awaiting a House vote includes that $60 billion specifically earmarked for smaller financial institutions as Congress responded to criticisms big banks and big company borrowers have been the primary beneficiaries of the Paycheck Protection Program, which exhausted its initial $349 billion in funds.
The bill now before Congress provides another $310 billion for the PPP, including the funds for smaller institutions such as credit unions and CDFIs. The $60 billion is to be divided with $30 billion for loans made by insured depository institutions with between $10 billon and $50 billion in assets, and $30 billion for loans made by institutions with assets of less than $10 billion.
But ensuring credit unions and other smaller institutions have access to the funds will require changes in the application processing portal, as it is not currently set up to demarcate lenders by size, according to the Wall Street Journal. Treasury Department officials told the Journal, however, it is working with the SBA to code which financial institutions fall under the set-asides to minimize any delay.
SBA Has Not Released Data
Meanwhile, the Small Business Administration rejected multiple requests earlier this week for detailed information about borrowers in the new Paycheck Protection Program, saying it needed to prioritize its effort to assist businesses, according to the Journal.
“That decision means that for now the public won’t get a comprehensive look at the $350 billion rescue package intended for Main Street, amid debate over which companies should be getting the money,” reported the Journal, which had filed Freedom of Information Act requests to get the data.
As CUToday.info has reported, numerous large companies, especially in the restaurant and hotel industries, have been able to leverage a loophole in the PPP’s rules to secure funds. The PPP is supposed to be limited to organizations of 500 employees or fewer, but the loophole allows organizations of 500 employees per location. Among those that have received funds have been Ruth’s Chris restaurants and Shake Shack, with the latter saying it would return the funds.
Overall, dozens of public companies received PPP loans totaling more than $340 million, according to a Wall Street Journal analysis.
The SBA earlier said it disbursed the first $350 billion, more than it typically lends over 14 years, in less than 14 days, noted the Journal. The agency said it made nearly 1.7 million loans, averaging $206,000 each. The largest recipient in terms of total dollars was the construction industry, which received nearly $45 billion, or 13% of the total.
EIDL Grants
In addition, a Journal analysis has found the federal government has issued emergency grants totaling $3.29 billion to 755,476 small businesses across the country, along with loans worth $5.57 billion to nearly 27,000 businesses as part of the SBA’s Economic Injury Disaster Loan (EIDL) program, according to new data compiled by the Journal.
The grants have averaged $4,360. The average size of the approved loans was $206,801, according to the analysis, similar to the average $206,022 approved under the Paycheck Protection Program, the Journal said.