PPP, EIP questions remain, guidance needed from Treasury, SBA
CUNA addressed many of the challenges facing credit unions during implementation of COVID-19 relief legislation in a letter to the Senate Banking Committee. Treasury Secretary Steven Mnuchin and Federal Reserve Board Chairman Jerome Powell testified before the committee Tuesday for a quarterly report on the status of the CARES Act.
“Credit unions welcomed the opportunity to help Americans by making PPP loans to small businesses that desperately needed help. We understand that rolling out this unique lending program was challenging for the SBA and clearly the product was still being developed as credit unions and other lenders were originating loans,” the letter reads. “Unfortunately, as was expected, the compressed timeframe in which the PPP was enacted and implemented resulted in many challenges for our member credit unions in making, processing, and disbursing loans.”
Highlights of the letter include:
- SBA should further refine its PPP process to ensure equal access from borrowers regardless of the financial institution serving as the lender;
- Operational challenges with the PPP include lack of mechanism to provide feedback, lack of updated guidance, as well as the need for lender prioritization guidance, guidance on the use of SBA forms and guidance on the purchasing process for loans;
- The SBA must address lender liability or it will risk losing lenders willing to make PPP loans and Congress needs to act to relief borrowers that carried out the PPP in good faith from liability stemming from the structure and design of the PPP;
- Although most Economic Impact Payments (EIPs) have been sent, the Internal Revenue Service and Treasury should study errors made and fix those problems to prepare for any future additional payments; and
- Congress should enact legislation protecting EIPs from garnishment.