Credit Unions to Treasury: Streamline the PPP Forgiveness Process
June 2, 2020
For Northwest credit union teams that worked round-the-clock shifts to help thousands of businesses obtain Paycheck Protection Program loans, it was almost a labor of love; an effort that meant employees of businesses impacted by the COVID pandemic could continue being paid.
Now comes the next hard part: forgiveness. If businesses document the loans were properly used (75% for employee costs, up to 25% for rent and utilities), the loans effectively become grants and are forgiven.
Forgiveness is the “linchpin” of the program, as most businesses that received PPP loans cannot shoulder paying them back, according to a letter the credit union system sent to Treasury Secretary Steven Mnuchin. Northwest Credit Union Association President and CEO, Troy Stang, joined CUNA President and CEO Jim Nussle, and other league presidents, in signing the letter.
“Credit unions are concerned that the recently published application for loan forgiveness is overly complex for most businesses,” the letter stated. Small businesses, the letter pointed out, “have fewer resources to deploy on an overly complex application process.”
The credit union system recommends that the Small Business Administration revamp the forgiveness process for loans under $350,000 — the vast majority of loans granted and the threshold for which the CARES Act makes the lowest cutoff in determining lender processing fees. The letter also suggests that the smallest of borrowers — perhaps those that received funding of $50,000 or under, be required to provide nothing more complex than a good faith certification that the funds were used for forgivable expenses.
Read the letter here.
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Posted in Advocacy News.