Newsroom
NAFCU to SBA: PPP forgiveness process needs improvements
NAFCU's Kaley Schafer, in a letter to the Small Business Administration (SBA) Tuesday, recommended ways the paycheck protection program (PPP) loan forgiveness process could be improved and urged the SBA to provide lenders and borrowers' a longer period to respond to PPP loan review requests.
The letter was in response to an interim final rule (IFR) that created a simpler loan forgiveness process for PPP loans under $50,000 and sought to reduce lenders' responsibilities related to reviewing borrowers' documentation.
Schafer, NAFCU’s senior regulatory affairs counsel, also asked the SBA to support legislative efforts to amend the CARES Act to exclude economic injury disaster loans (EIDLs) advance amounts from the calculations of loan forgiveness under the PPP.
“In the interim, NAFCU asks that the SBA amend the applications and instructions to put borrowers on notice of the deduction of EIDL advances from PPP loan forgiveness amounts,” wrote Schafer.
With regard to SBA form 3508S – the newly created form for PPP loans under $50,000 – Schafer expressed appreciation for the SBA’s commitment to streamlining the PPP forgiveness process; however, as credit unions begin processing form 3508S, Schafer called on the SBA to provide additional guidance and clarification as necessary.
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. Schafer reiterated NAFCU’s call for the automatic loan forgiveness for PPP loans of $150,000 and lower.
“Credit unions remain concerned about the staffing levels necessary to process all loan forgiveness applications without negatively impacting the credit unions’ ability to approve new loans quickly,” wrote Schafer. “As the pandemic endures, small businesses are still in need of capital to weather the storm.
“NAFCU again urges you to utilize available flexibilities within the CARES Act allowing for de minimis exemptions or other authorities to provide this relief for small businesses as quickly as possible,” added Schafer. “Alternatively, NAFCU requests the agency support a legislative fix that would allow automatic forgiveness of loans of $150,000 and lower.”
NAFCU continues to work closely with the SBA, Treasury Department, and Congress to make improvements to the PPP and secure guidance needed to ensure credit unions can lend effectively through the program.
View the association’s recently updated PPP FAQs; view the SBA’s FAQs here. Access all of NAFCU’s coronavirus resources here.