ARLINGTON, Va.–As CUToday.info reported earlier, financial institutions are now bracing for a third wave of applications related to the Paycheck Protection Program (PPP)—this time for repayment forgiveness.
What has many concerned are compliance-related concerns and whether the loans will actually be forgiven as so many of the small business applicants expect—or will there be small business owners streaming into credit unions upset they are expected to repay?
Under terms of the PPP, businesses that comply with the core requirements—75% of the funds are to go toward employee costs (with no reduction in headcount) and 25% are to go toward other expenses. But the hastily rolled out program and the subsequent rules updates and clarifications have many worried more than just a compliance headache lies ahead.
Ann Kossachev, director of regulatory affairs with NAFCU, agreed there are worries over what might happen if a credit union that processed a PPP loan didn’t check off every box correctly or fill out the paperwork exactly as the Small Business Administration expected.
Some ‘Contradictions’
Kossachev said the clarifications and rules tweaks the SBA has made to date have helped address some of the potential trouble-points, but there continue to be some “contradictions.”
“The rush to get this done has caused some confusion, and the liability issue is a big one,” Kossachev said.
One example: What happens if a credit union through no fault of its own files a fraudulent PPP application on behalf of someone else.
“(The PPP) is a fantastic option for a small business that is struggling,” said Kossachev. “But it could use a little more clarification. We’re not quite there yet.”