Thaler: Automatic forgiveness would reduce burdens for PPP borrowers, lenders
NAFCU's Brad Thaler Tuesday called on House Small Business Committee members to support efforts to provide automatic forgiveness of paycheck protection loans (PPP) under $150,000 and simplify and streamline the forgiveness application process to ensure borrowers and lenders are not overly burdened.
With just over $129 billion of PPP funds remaining as of June 12, the Small Business Administration asked lenders to focus on underserved areas before the program sunsets June 30. Program stakeholders have focused recent efforts on the loan forgiveness process, including NAFCU which is in constant contact with the SBA and Congress to share credit unions' perspective on the PPP. Additional insights on NAFCU's efforts to obtain relief, resources, and guidance for credit unions lending through the PPP are detailed in a new post on NAFCU's member-only Compliance, BSA & Risk Network.
The House Small Business Committee is set to hold a hearing at 1 p.m. Eastern today with PPP borrowers and lenders to discuss challenges of the program, including the forgiveness application.
"NAFCU believes it is important to simplify the loan forgiveness process and application for smaller PPP loans," wrote Thaler, NAFCU's vice president of legislative affairs, to the committee. "While credit unions are working with their members to assist them with the current loan form, the complexity of the forgiveness rules and application is posing challenges for many small businesses who may not have the staff or expertise for such a complex application, especially with the current economic challenges."
Thaler noted that smaller PPP loans pose a lower risk of fraud and the SBA has the authority to review a borrower's PPP information even if the forgiveness process were to be streamlined. According to the SBA's most recent PPP data, credit union PPP lenders with less than $1 billion in assets have an average loan size of $50,000.
Last week, almost all senators – in a pair of letters – urged the SBA and Treasury Department to ease the forgiveness process. The senators noted that the forgiveness application is significantly longer than the initial application to receive a PPP loan. NAFCU had previously sent letters to the Senate Small Business Committee and SBA Administrator Jovita Carranza with its request for automatic loan forgiveness and a simplified application.
NAFCU will continue advocating for improvements to the PPP to ensure credit unions can lend effectively through the program.