ARLINGTON, Va.–While pleased to see the progress made on new funding for the Paycheck Protection Program, NAFCU said it continues to seek a funding carve-out for community based financial institutions and CDFIs.
NAFCU EVP/General Counsel Carrie Hunt called the additional funding “incredibly positive” but said the carve-out, which would set aside funds for smaller institutions, is needed to help credit unions reach those members who need loans.
Most importantly, she said, designating funds for smaller institutions would ensure PPP loans reach Main Street businesses that likely would otherwise not receive funds.
Other issues touched on by Hunt:
- Hunt praised the rule change announced late last week by the Fed that temporarily modifies rules so that directors and shareholders can apply for PPP loans for their small businesses from those same institutions. The conflict issue related to board members had become a question at credit unions, where many directors are also small business owners. In some cases, CUs have directed board members to other credit unions participating in the PPP as a workaround. NAFCU has confirmed the rule change applies to CU board members. The SBA clarified that PPP lenders can make PPP loans to businesses owned by their directors and certain shareholders, subject to certain limits and without favoritism, allowing those individuals to apply for PPP loans, consistent with SBA's rules and restrictions. The change only applies to PPP loans.
“It just didn’t make sense,” Hunt said of the earlier prohibition.
- Hunt said NAFCU was pleased to see the changes in appraisal thresholds and other new rules adopted or proposed by the NCUA board at its meeting last week, saying the issues had been priorities for its CU members.
- Hunt said NAFCU continues to work with NCUA on providing relief in the areas of liquidity and capital, as many CUs are expected to begin feeling the pressure later this year from the loan forbearances and other relief being provided as part of the coronavirus pandemic.
It is also seeking ongoing relief on the examination side. “If there is a technical violation of some kind the credit union shouldn’t be punished for that, that’s ridiculous,” said Hunt.