December 22, 2020

New relief package includes CU wins

Capitol HillBoth the House and Senate Monday night passed the Phase 4 coronavirus relief and fiscal year 2021 funding omnibus package. There are several NAFCU-sought provisions included in the package that will provide additional support for credit unions and their 123 million members.

President Donald Trump has not yet signed the relief package, but is expected to do so; however, he has signed the seven-day continuing resolution also passed by Congress last night to prevent a government shutdown. 

Ahead of the votes, NAFCU sent a letter to congressional leadership outlining provisions of the bill that will benefit credit unions and their 123 million members and flagging some concerns that Congress should consider in future relief efforts.

"NAFCU applauds House passage of the latest coronavirus relief package, and the final bill includes many NAFCU-sought wins for the credit union industry," said NAFCU President and CEO Dan Berger following the House vote. "The legislation's replenishing of the PPP loan program, as well as simplifying the forgiveness process, providing more CDFI funds, and extending reforms to the Central Liquidity Facility and troubled debt restructuring requirements will help credit unions and their members continue to overcome the financial impact of the pandemic.

"NAFCU will continue to stand with credit unions throughout this crisis, and we are committed to helping them emerge better and stronger."

In addition to coronavirus relief, the package funds the federal government until Oct. 1, 2021. The bill also:

CARES Act credit union relief:

  • extends NAFCU-sought flexibility to suspend the requirements for financial institutions to classify certain loan modifications as troubled debt restructurings (TDRs) to Jan. 1, 2022, or 60 days after the coronavirus national emergency is terminated (whichever is earliest);
  • extends flexibility provided to the NCUA to enhance credit unions' use of the Central Liquidity Facility (CLF) through Dec. 31, 2021; and
  • further extends the optional, temporary relief from the current expected credit loss (CECL) standard. While credit unions' mandatory effective date for CECL isn't until 2023, some credit unions have adopted the standard early and this provision provides optional relief.

Paycheck protection program (PPP):

  • provides $284.5 billion to reopen and strengthen the PPP;
  • creates a process for the hardest hit small businesses to receive a second PPP loan, capped at $2 million, if the business has less than 300 employees and can demonstrate a revenue reduction of 25 percent;
  • sets aside $15 billion for small, community-based lenders, including credit unions with less than $10 million in assets;
  • sets aside $35 billion for first-time borrowers, with $15 billion of that reserved for businesses with 10 or fewer employees or loans less than $250,000 in low-income areas;
  • sets aside $25 billion for second-draw PPP borrowers that meet the criteria in the previous bullet;
  • includes NAFCU-sought language to simplify the forgiveness process for loans under $150,000 and to provide protections for lenders;
  • expands the eligible list of expenses;
  • repeals the CARES Act provision that required PPP borrowers to deduct from their forgivable amount economic injury disaster loan (EIDL) advances, which NAFCU had raised concerns about; and
  • requires the Small Business Administration (SBA) to issue new rules for reopening the PPP within 10 days of the bill's enactment.

EIDL advance program:

  • provides $20 billion to restart and extend the EIDL advance grant for small businesses in low-income communities; and
  • creates a process for grantees that received less than the $10,000 maximum to reapply for the difference between their initial grant and the maximum amount.

Credit union programs:

Stay tuned to NAFCU Today as the association's award-winning advocacy team develops resources for credit unions on these new provisions.