WASHINGTON—NAFCU thinks the Paycheck Protection Program (PPP) can be improved, while CUNA wants PPP loans to be exempted from the member business lending cap.
The trade associations shared their perspectives in separate letters delivered before a Senate Small Business Committee meeting this week to review the impact of PPP and consider next steps to further support recovery from the coronavirus pandemic.
In the letter to the committee, Brad Thaler, NAFCU's vice president of legislative affairs, touted credit unions' efforts to support the smallest businesses through the PPP.
"An analysis of the [SBA's] PPP data from the first two rounds shows that credit unions made loans in amounts much lower than the national average, with the credit union average PPP loan approximately $50,000," Thaler wrote. "Furthermore, a full 70% of credit union PPP loans went to businesses with less than five employees."
Thaler acknowledged congressional efforts to provide additional funds to the PPP, allow hardest-hit small businesses to take out a second PPP loan, and simplify the forgiveness process. As issues remain with the PPP approval and forgiveness processes, Thaler also offered the association's perspective on recently-introduced legislation that would extend the program by two months, which the House passed Tuesday evening.
To further support small businesses and the nation's economic recovery from the coronavirus pandemic, Thaler called on lawmakers to support bipartisan legislation that would allow credit unions to offer more small business loans by excluding pandemic-related loans from their arbitrary member business lending cap.
CUNA’s Perspective
In its letter, CUNA noted that looking beyond PPP, the arbitrary credit union member business lending cap is an obstacle for businesses to get capital and should be at least temporarily lifted, CUNA wrote to the Senate Small Business Committee.
"Even temporarily lifting the cap will result in more credit union business lending. While credit union business lending has increased greatly since the Great Recession, many credit unions are now approaching the 12.25% of assets cap,” the letter reads.
CUNA said it strongly supports legislation introduced by Reps Brad Sherman (D-CA) and Brian Fitzpatrick (R-PA) that would exempt disaster related loans from the MBL cap during and for up to one year after the declared national emergency.
Creating More Small Businesses
“Representatives Sherman and Fitzpatrick recently introduced legislation (H.R. 1471) that would lift the cap for the duration the COVID-19 pandemic and for one year following its declared end. We conservatively estimate that temporarily removing the MBL cap, this legislation will provide over $5.5 billion in capital to small and informal business ventures, creating nearly 50,000 over the course of the next year.”
CUNA also noted that additional credit union lending will not impede bank activity, instead Small Business Administration research shows that roughly 80% of credit union business loans are loans banks would not make.