CUNA/AACUL/Leagues bring PPP recommendations for equal CU access

April 14, 2020

Challenges to lenders making loans through the Paycheck Protection Program (PPP) persist, CUNA, the American Association of Credit Union Leagues and state Leagues wrote to Treasury Secretary Steven Mnuchin Tuesday. The PPP is a Small Business Administration product designed to help small businesses meet costs during the coronavirus disease (COVID-19) pandemic.

CUNA, AACUL and the Leagues wrote to Mnuchin April 3, the day the PPP became active, with concerns over the compressed timeline for implementation and publishing of guidelines, and today’s letter notes that challenges still remain for credit unions to fully participate in the program and serve member businesses.

“We hope that you will give all due consideration to these recommendations as equal and fair access for all credit unions is critical to the success of the program,” the letter reads. “Credit unions are eager to work with you to ensure that the PPP is successful, and we hope that you find these comments constructive.”

Challenges with the program include:

  • Lack of support from the SBA, as credit unions have indicated that getting general questions answered and access to the SBA lending platform has been challenging;
  • Loan closing concerns. The SBA has told lenders that they don’t need a PPP specific loan note or a PPP loan authorization form before an approved loan is disbursed. Because of the loan forgiveness feature and the other factors that make PPP loans unique among SBA loans, that assurance is falling short for credit unions. A rejection by SBA would leave a credit union holding the loan and could take away the borrower’s ability to have the loan forgiven;
  • Clarification on the disbursement of loans. Credit unions need additional clarification on the actual disbursement of the loans to borrowers. It remains unclear whether the entire approved amount is made available to the borrower at disbursement and whether lenders have the authority to require borrowers to open accounts - if the borrowers are not already members - for the acceptance of the loan proceeds. There is also confusion regarding whether a borrower has a choice of financial institutions where proceeds are deposited; and
  • Clarification on Forms. Credit unions have also had questions over several specific forms, and the letter calls for the SBA, when it updates or replaces forms for the PPP on its website, to remove the old forms and provide notice that forms have been updated. Further, the SBA should provide guidance on whether the forms for loans in the pipeline must be altered.