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NCUA clarifies CUs' PPP expectations, highlights relevant CARES Act provisions
The NCUA said it will not criticize credit unions' good faith efforts to prudently use the Small Business Administration's (SBA) paycheck protection program in order to provide relief to members affected by the coronavirus in a Letter to Credit Unions yesterday. Since the application process opened Friday, several financial institutions – including credit unions – have had difficulties accessing the required systems and submitting program paperwork.
The SBA last week released an interim final rule to implement the $349 billion program created under the CARES Act. Previous guidance from the Treasury Department indicated all federally-insured credit unions will be able to offer loans under the program, but those that are not currently SBA-approved lenders must submit an application to become one. The application period for small businesses opened last Friday; independent contractors, self-employed individuals, and sole proprietors can begin applying this Friday.
In the letter, the NCUA also noted means of additional assistance via the SBA’s economic injury disaster loan (EIDL) program. This program was created to provide economic support to small businesses to help them overcome the temporary loss of revenue they experience because of the pandemic; these loans provide a grant of up to $10,000 and do not have to be repaid.
Credit unions do not qualify as borrowers under the paycheck protection program, but can qualify for an EIDL.
In addition, the NCUA released another Letter to Credit Unions yesterday detailing CARES Act provisions and how they affect credit unions. NAFCU has previously shared a regulator response table, outlining the guidance released by various regulators, as well as a comprehensive summary of the CARES Act.
NAFCU will continue to seek more guidance from the SBA and Treasury to ensure credit unions can efficiently process loan applications and become SBA-approved lenders if not already certified. Credit unions are encouraged to continue contacting NAFCU with updates on how they are doing, what assistance they need, and potential areas to address as Congress begins work on a Phase 4 relief package.
The association developed an FAQ document answering 22 questions on the program in an effort to help credit unions better understand the process for offering loans. Additionally, NAFCU sent a Final Regulation Alert to member credit unions detailing the interim final rule implementing the program when it was released.
Access all of the association's resources related to the coronavirus here.