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House passes PPP legislation; SBA, Treasury reserve $10B in PPP funding for CDFIs
The House Thursday passed bipartisan legislation, on a 417-1 vote, to ease restrictions on how businesses use the paycheck protection program, expanding the terms of the loans. Also on Thursday, the Small Business Administration in partnership with the Treasury Department announced that $10 billion of the PPP's round two funding will be set aside for Community Development Financial Institutions (CDFIs).
"NAFCU appreciates the Treasury Department and the SBA allocating $10 billion in PPP funding to be lent exclusively by CDFIs,” said NAFCU President and CEO Dan Berger. “NAFCU has consistently advocated for more PPP funds to be set aside for CDFIs and MDIs to ensure low-income and underserved communities have the financial resources needed to weather the pandemic.
"This decision will allow emergency capital to reach the communities that need it the most during this difficult and uncertain economic period. NAFCU will continue to advocate for additional CDFI funding," Berger added.
The agencies indicated CDFIs have approved more than $7 billion in PPP loans as of May 23, with $3.2 billion occurring during round two.
Since the onset of the coronavirus pandemic, NAFCU has urged for additional funding for the Treasury Department's CDFI Fund and the NCUA's Community Development Revolving Loan Fund to ensure low-income and underserved communities have the resources they need to weather the pandemic.
Under the House-passed bill, small businesses would have up to 24 weeks to use the loans and the deadline for rehiring workers would be extended from June 30 to the end of this year. It would also change the requirement related to the portion of PPP loan forgivable amount that must be used toward payroll from 75 percent to 60 percent.
While the bill now moves to the Senate for consideration, the Senate last week reached its own bipartisan agreement on legislation to extend some provisions of the PPP and proposed its own relief package, S.3833, the Paycheck Protection Program Extension Act.
NAFCU will continue to monitor the bills as they move through both chambers and remain in contact with the SBA, Treasury Department, and Congress to ensure credit unions can lend effectively through the program. Access NAFCU's recently updated PPP FAQs here.