Auto forgiveness of PPP loans less costly for govt, lenders
CUNA joined more than 100 consumer-focused organizations to call on Congressional leadership to quickly pass Paycheck Protection Program (PPP) forgiveness.
“Bipartisan and bicameral legislation introduced earlier this Congress and would reduce compliance costs by streamlining the forgiveness process for mom-and-pop businesses who received PPP loans during these unprecedented times,” the letter reads. “Additionally, passing such legislation that would expand the hold harmless protections for lenders will provide financial institutions that originated and currently service PPP loans the opportunity to focus their time and energy on providing much-needed credit and financial services to individuals and businesses by creating regulatory certainty for PPP loans in the future.”
The Paycheck Protection Program Small Business Forgiveness Act (S. 4117) is sponsored by Sens. Kevin Cramer (R-N.D.), Bob Menendez (D-N.J.), Thom Tillis (R-N.C.) and Kyrsten Sinema (D-Ariz.).The House version, H.R. 7777, is sponsored by Reps. Chrissy Houlahan (D-Pa.) and Fred Upton (R-Mich.).
The letter cites an independent analysis showing an effective cost of $2,000-$4,000 for each business that applies for forgiveness, requiring 20-100 hours of focused time from key leaders of these businesses.
“With an average loan size of less than $19,000 for the smallest 60% of loans, this estimate would represent 10-20% of the loan amount itself, which is otherwise intended to support payroll, rent, and other obligations necessary to keep businesses alive and ready to restart,” the letter reads.
CUNA has made numerous calls to Congress to include PPP forgiveness legislation in any upcoming relief package, including a letter from all state credit union Leagues, and signed onto a similar letter in September.