WASHINGTON—While the Small Business Administration has reopened applications for its Paycheck Protection Program—and deal with many of the same glitches as the first round of the program—NAFCU is reminding credit unions seeking to participate there are several updates for credit unions to be aware of.
As CUToday.info reported, President Donald Trump signed the new PPP funding package, which includes $250 billion in new funding for the PPP, plus $30 billion set aside for small lenders with less than $10 billion in assets, and another $30 billion reserved for lenders with assets between $10 billion and $50 billion.
New developments since the funding package was enacted include:
- NCUA Letter to Credit Unions: The NCUA has released a new Letter to Credit Unions further detailing key considerations for credit unions looking to participate as PPP lenders. The letter explains differences between PPP loans and 7(a) loans, eligibility criteria, loan terms and loan forgiveness. It also includes a presentation from the SBA to help credit unions become a PPP lender.
- Lending operations: As CUToday.info reported, the SBA announced it is instituting a maximum dollar amount at 10% PPP funding authority that any lending institution will be able to originate, exclusive of the additional $60 billion preserved for smaller lenders. It will also pace the number of loans processed in the E-Tran system, and will work to ensure that lenders access PPP funds based on asset size and applications are considered on a first-come, first-served basis.
- Batch processing: The SBA allowed batch processing for lenders to submit multiple loan applications that totaled a minimum of 15,000 loans, and allowed batch processing for a minimum of 5,000 loans.
- SBA/Treasury FAQs: The SBA and Treasury Department are regularly updating their FAQs as new issues and questions related to the PPP arise. The newest version includes a question (No. 31) asking borrowers to assess their economic need for a PPP loan, as well as others that address what constitutes payroll costs, the ability of agricultural producers and farmers to apply for loans, and what employees count toward eligibility requirements.
- Interim final rules: The SBA has issued two new interim final rules. One of the rules clarifies promissory note requirements, that a business in bankruptcy is not eligible for a PPP loan, and more. The other rule stipulates additional criteria for seasonal employers that are eligible for PPP loans.
- Guidance on sales: The SBA has released a procedural notice indicating that all PPP lenders may sell interests to other participating lenders in accordance with SBA's regulations. The SBA does not need to provide prior written consent for the sale, and the originating lender must continue to hold the note, the loan documents and retain servicing rights. The originating lender must provide SBA's Office of Credit Risk Management with prior written notice of any participating interest sale at PPPLoanParticipation@sba.gov
- Lenders by state: The SBA released a list of lenders, organized by state, that are providing loans through the program. Hundreds of credit unions are participating as lenders.
- Lawmakers call for more funding: A bipartisan group of 74 representatives, led by Reps. Josh Gottheimer (D-NJ) and Fred Upton (R-MI) urged House leadership to ensure the PPP stays fully funded to meet small businesses' needs throughout the pandemic.