WASHINGTON—CUNA, NAFCU and 79 other organizations have written to the leadership in Congress, Treasury and the Small Business Administration to express concerns over a new Paycheck Protection Program (PPP) review process, including “Loan Necessity Questionnaires.”
Separately, NAFCU also pressed for regulatory relief related to PPP loan forgiveness.
“Unfortunately, the questionnaires introduce a confusing and burdensome process for both borrowers and lenders, and we fear that it could lead the agencies to inappropriately question thousands of qualified PPP loans made to struggling small businesses,” the letter reads. “On behalf of the millions of American workers supported by PPP loans, we urge you to act quickly to work directly with SBA and Treasury to avoid this unintended consequence.”
Under the new requirements, PPP borrowers with loans of $2 million or greater must complete one of two versions of the new Loan Necessity Questionnaire and provide extensive documentation supporting their responses.
The organizations, in letters to the SBA and Treasury, requested the agencies consider temporarily suspending use of these questionnaires while working together toward a better solution.
The letter to Congressional leaders includes specific issues with the process, including policy concerns, borrower and lender burdens and CARES Act requirements related to borrower good faith certifications, CUNA said.
NAFCU Presses For Relief
Separately, NAFCU is again recommending ways the Paycheck Protection Program loan forgiveness process could be improved and is urging the SBA to provide lenders and borrowers' a longer period to respond to PPP loan review requests.
NAFCU sent a letter to the SBA in response to an interim final rule that created a simpler loan forgiveness process for PPP loans under $50,000 and sought to reduce lenders' responsibilities related to reviewing borrowers' documentation.
In the letter, Kaley Schafer, NAFCU’s senior regulatory affairs counsel, also asked the SBA to support legislative efforts to amend the CARES Act to exclude economic injury disaster loans (EIDLs) advance amounts from the calculations of loan forgiveness under the PPP.
“In the interim, NAFCU asks that the SBA amend the applications and instructions to put borrowers on notice of the deduction of EIDL advances from PPP loan forgiveness amounts,” wrote Schafer.
Additional Guidance Sought
With regard to SBA form 3508S – the newly created form for PPP loans under $50,000 – Schafer expressed appreciation for the SBA’s commitment to streamlining the PPP forgiveness process; however, as credit unions begin processing form 3508S, Schafer called on the SBA to provide additional guidance and clarification as necessary.
The association noted it has actively sought automatic forgiveness of small dollar PPP loans for the benefit of both small businesses and credit unions that are recovering from the coronavirus pandemic and may have strained financial and human resources. Schafer repeated NAFCU’s call for the automatic loan forgiveness for PPP loans of $150,000 and lower.
“Credit unions remain concerned about the staffing levels necessary to process all loan forgiveness applications without negatively impacting the credit unions’ ability to approve new loans quickly,” wrote Schafer. “As the pandemic endures, small businesses are still in need of capital to weather the storm.
More Flexibility Needed
“NAFCU again urges you to utilize available flexibilities within the CARES Act allowing for de minimis exemptions or other authorities to provide this relief for small businesses as quickly as possible,” added Schafer. “Alternatively, NAFCU requests the agency support a legislative fix that would allow automatic forgiveness of loans of $150,000 and lower.”