WASHINGTON—Changes to regulations and the creation of new lending programs have and will continue to help consumers affected by the COVID-19 pandemic, CUNA said in a letter to the House Small Business Committee prior to its hearing on oversight of pandemic recovery programs.
While CUNA thanked Congress for the various relief programs, it called on the legislative body and the SBA to address PPP lender liability concerns.
“Credit unions and other lenders essentially acted as agents of the government disbursing funds to small businesses during this time of need,” the letter reads. “Congress and the SBA ought to do the right thing by holding lenders harmless for errors that may have been made as a result of unclear, ambiguous or inadequate guidance, as well as misstatements and fraudulent activity on the part of borrowers. Congress should use upcoming recovery legislation to protect lenders from PPP related liability.”
Simplification Needed
The letter also notes that the key component to PPP loans is loan forgiveness, and asked Congress and the SBA to simplify the loan forgiveness application process for loans under $350,000.
The threshold would capture most loans and is the amount at which the CARES Act makes the lowest cutoff in determining lender processing fees, according to CUNA, which said the agencies should also consider making forgiveness of these loans automatic or simply require a good faith certification that the funds were spent on forgivable expenses.
Operational Challenges
CUNA said remaining operational challenges include:
- Lack of support from the SBA to provide timely feedback on issues
- Lack of updating guidance and forms to reflect privately insured state-chartered credit unions are eligible to be PPP lenders
- Lender prioritization guidance
- Official guidance formalizing the use of SBA forms
- Lack of guidance on the purchasing process of loans
Should an additional Economic Impact Payment be sent to consumers, CUNA suggested the IRS and Treasury provide real-time information to financial institutions to help mitigate fraud and manage expectations, and Congress should protect the payments from garnishment.