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Ahead of a House Small Business subcommittee hearing today to investigate ways to prevent fraud and abuse of coronavirus pandemic-related lending programs, including the paycheck protection program (PPP), NAFCU's Brad Thaler stressed the benefits of these programs in providing a lifeline to struggling small businesses.

"As you know, credit unions have stepped up to ensure small businesses in their communities are taken care of during these uncertain times, and their response through the [PPP] was tremendous," wrote Thaler, NAFCU's vice president of legislative affairs. "Despite the uncertainty surrounding the PPP as it launched and the associated risks, credit unions did all they could to ensure their existing and new small business members were taken care of."

Thaler highlighted findings from a NAFCU survey and Small Business Administration (SBA) administration data that revealed:

• 87 percent of NAFCU members reported providing PPP loans to new members and businesses that were turned away by other lenders and came to their credit union to apply for a PPP loan;
• compared to other types of lenders, credit unions disproportionately helped the smallest of small businesses as an analysis of SBA’s PPP data shows that credit unions made loans in amounts much lower than the national average, with the credit union average PPP loan approximately $50,000; and
• a full 70 percent of credit union PPP loans went to businesses with less than five employees.

While NAFCU has continuously worked with the SBA, Treasury, and Congress to ensure credit unions' ability to lend effectively through the program and help their small business members, the association has actively sought automatic forgiveness of small dollar PPP loans for the benefit of both small businesses and credit unions that are recovering from the coronavirus pandemic and may have strained financial and human resources. Thaler reiterated the need for a simplified PPP loan forgiveness process in his letter to the committee.

"Unfortunately, the time and money spent on forgiveness paperwork takes away from a small business’s ability to serve its customers and continue to be able to pay its employees – a direct contradiction to the spirit of the PPP, which was designed to provide simplified aid to those in dire need of assistance," Thaler argued. "Recent media reports have quoted borrows as needing 15 hours to complete the form, and lenders needing 50-70 hours. This time requirement is unrealistic for struggling small businesses."

In its advocacy for a simplified PPP forgiveness process, NAFCU joined with several trades earlier this week to call for a standalone PPP bill to be advanced. Sen. Kevin Cramer, R-N.D., Wednesday attempted to pass NAFCU-supported legislation – the Paycheck Protection Small Business Forgiveness Act, S. 4117 – by unanimous consent; however, the motion failed as some lawmakers called for a more comprehensive effort via a coronavirus relief effort. Sens. Mike Rounds, R-S.D., and Thom Tillis, R-N.C., joined Cramer in support of passing the bill acknowledging that small businesses and lenders need immediate assistance.

In addition to examining the PPP, the House Small Business subcommittee will examine fraud within economic injury disaster loans (EIDL) during today's hearing, set to begin at 10 a.m. Eastern.

Read Thaler's full letter here.