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Ahead of today's House Small Business Committee hearing to explore long-lasting solutions for small business recovery, NAFCU Vice President of Legislative Affairs Brad Thaler shared credit unions' work to serve their small business members through the Small Business Administration's (SBA) paycheck protection program (PPP) during the coronavirus pandemic.

"Nearly 1,000 credit unions have participated in the Small Business Administration’s (SBA) Paycheck Protection Program (PPP) and have helped countless small businesses survive the lockdowns required by the current pandemic," wrote Thaler. "Additionally, many small businesses have turned to credit unions for PPP loans when other lenders would not work with them, leading to an influx of new small business members at credit unions."    

In the letter, Thaler shared the association's support for automatic loan forgiveness for PPP loans under $150,000, which accounts for 85 percent of PPP recipients, but only accounts for 26 percent of the funds disbursed by the SBA.

"This level would cover the majority of credit union loans, the vast majority of which have been to smaller businesses that could most benefit from this automatic forgiveness," Thaler highlighted.  "A smaller PPP loan is less likely to pose a high risk of fraud so the benefits to all small businesses and lenders of providing this automatic or simplified forgiveness significantly outweigh the potential risks."

The association has previously called on the SBA to support automatic forgiveness for these loans and most recently joined with more than 140 other trade groups to urge Congress to pass the pending bipartisan legislation that would ease the forgiveness process for loans under $150,000.

In addition to calling for the Committee to support relief from the credit union member business lending cap, Thaler also urged the committee to consider changes to other SBA programs, such as the 7(a) and 504 programs, to improve them from a credit union perspective.

"Increasing the maximum loan guaranty percentage of these SBA programs and taking steps to mitigate the fees involved with them will help the hundreds of credit unions that are now SBA lenders thanks to the PPP continue to serve their small business members with SBA products after the PPP expires," noted Thaler.

Additionally, the SBA Tuesday updated its procedural notice regarding the ongoing reporting requirements for PPP loans, clarifying ongoing reporting requirements. Under the update, lenders must submit monthly PPP 1502 reports on or before the 15th of each month starting today. For the month of July only, lenders are permitted a two day grace period.

According to the latest loan data, as of July 10, the overall average loan size is $105,000. Credit unions with less than $1 billion in assets have processed 63,238 loans. More than $132 billion dollars in funding, including $10 billion set aside for community development financial institutions, remains.

Since the PPP was created as part of the CARES Act coronavirus relief package, NAFCU has consistently worked with Congress, the SBA and Treasury to ensure credit unions can lend effectively through the program and lenders and ensure lenders and borrowers are not overly burdened by the application or forgiveness process.

For more information on the PPP, access NAFCU’s regularly updated FAQs. The association's coronavirus page also has several resources on congressional and regulatory efforts.