Liability, loan forgiveness concerns still surround PPP

June 17, 2020

Congressional action is needed to protect borrowers that carried out the Paycheck Protection Program (PPP) in good faith from any liability stemming from the structure and design of the PPP, CUNA wrote to the House Small Business Committee Wednesday.

“The complexity of the forgiveness process presents an even greater challenge for small business as they have fewer resources to deploy on an overly complex application process. Moreover, feedback from our members indicates that the forms will likely require help from outside accountants and even attorneys for most businesses,” the letter reads. “This is an expense many of the smallest businesses cannot afford. Creating an overly complex forgiveness process would seem to be the antithesis to the spirit of a program designed to rapidly deploy resources to small business especially when the expectation is that the funds appropriated to PPP were never expected to be repaid.”

CUNA recommends Treasury and the SBA simplify the forgiveness application process for loans under $350,000, and should consider “making forgiveness of these loans automatic or require a simply good faith certification that the funds were spent on forgivable expenses.”

CUNA also included in its letter to the committee a copy of its May 15 letter to Small Business Administration (SBA) Administrator Jovita Carranza and a May 29 letter to Carranza and Treasury Secretary Steven Mnuchin.

Those letters include remaining operational challenges that the SBA should address it additional PPP funding is provided, including:

  • Lack of support from the SBA to provide timely feedback on issues;
  • Lack of updating guidance and forms to reflect privately insured state-chartered credit unions are eligible to be PPP lenders;
  • Lender prioritization guidance;
  • Official guidance formalizing the use of SBA forms; and
  • Lack of guidance on the purchasing process of loans.