WASHINGTON–New funding for the Paycheck Protection Program (PPP) is on its way after the House voted 388-5 to join the Senate in approving a roughly $480-billion package of aid and stimulus for small businesses, hospitals and to pay for COVID-19 testing.
As CUToday.info reported earlier, the package includes $319-billion for the PPP, including $60-billion reserved for smaller financial institutions and CDFIs. As CUToday.info also reported, Treasury said it was working on coding needed for the application portal so the funds could be limited to those smaller institutions.
The money is expected to go quickly, as millions of applications from small businesses and lenders all over the country were reportedly in the pipeline when SBA announced it had exhausted its initial $349-billion in funds.
The bill is now expected to go to President Donald Trump, who has said he will sign the bill.
The new bill includes $75 billion for hospitals and health care providers to address coronavirus expenses and lost revenue and $25 billion to facilitate and expand COVID-19 testing.
Oversight Panel
Democrats in the House also voted in favor of a new panel with broad authority to oversee the federal response to the coronavirus pandemic. The panel will be a select investigative subcommittee of the House Oversight Committee.
NAFCU Response
In response to passage by the House, NAFCU President and CEO Dan Berger said, “We thank the House of Representatives for sending to President Donald Trump's desk legislation that will give over $300 billion in additional PPP funding aimed directly at assisting America's small businesses and local communities. The coronavirus pandemic has presented many challenges for our nation, and this legislation will ensure small businesses and underserved communities across the country have access to the funds they need to help navigate current economic conditions. In such uncertain and difficult times, credit unions stand ready to serve those facing financial hardships, and we thank Congress for ensuring credit union members benefit from these important funds.”
CUNA Response
CUNA President/CEO Jim Nussle said in a statement, “This important legislation will ensure that Main Street businesses and their employees can work with local credit unions to receive the financial support they need to see them through this crisis. Credit unions have been connecting community businesses with PPP funds since the program’s inception, and the $60 billion dedicated to community lenders, including credit unions, will especially go a long way to supporting small businesses that might have been unable to access the first round of funding.”
Fed Announces New Actions
At the same time the House was voting on the legislation the Fed announced temporary actions it said are aimed at increasing the availability of intraday credit extended by Federal Reserve Banks on both a collateralized and uncollateralized basis.
“These temporary actions are consistent with the series of actions the board has announced to support the flow of credit to households and businesses and to mitigate the disruptions from COVID-19,” the Fed said. “In particular, these actions are consistent with and indeed reinforce the Board's efforts to encourage regular use of intraday credit by healthy financial institutions."
In light of disruptions from COVID-19, depository institutions may face unanticipated intraday liquidity constraints and demands on collateral pledged to the Reserve Banks.
Additional Steps
“In response, the Board is adjusting the manner in which the Reserve Banks administer part II of the Federal Reserve Policy on Payment System Risk (PSR policy). Specifically, the Board is (1) suspending uncollateralized intraday credit limits (net debit caps) and is waiving overdraft fees for institutions that are eligible for the primary credit program; and (2) permitting a streamlined procedure for secondary credit institutions to request collateralized intraday credit (max caps),” the Fed continued. “Relatedly, the Board is suspending two collections of information that are used to calculate net debit caps. The Board believes that these actions will not meaningfully increase credit risk to Reserve Banks. These temporary actions will be applied immediately and will remain in effect until September 30, 2020, unless the Board communicates otherwise prior to that date.”