CFPB NPRM: Small Business Lending Data Collection Posted by AVCU on 4:17 PM

 The CFPB issued a notice of proposed rulemaking (NPRM) on its proposal to implement the small business lending data collection requirements set forth in section 1071 of the Dodd-Frank Act. The NPRM has a comment period of 90 days following publication in the Federal  Register. 

Section 1071 amended the Equal Credit Opportunity Act to require that financial institutions collect and report to the CFPB certain data regarding applications for credit for women-owned, minority-owned, and small businesses, among other requirements. 

The CFPB’s proposal would add a new subpart B to Regulation B to implement these requirements; and would require financial institutions to collect and report the amount and type of small business credit applied for and extended, demographic information about small business credit applicants, and key elements of the price of the credit offered. 

The CFPB is seeking comment on a variety of issues, including how to define a small business for purposes of this data collection (proposed: $5 million or less in gross annual revenue in the preceding fiscal year?); where to set the activity threshold for when a lender is required to report information (proposed: at least 25 covered credit transactions for small businesses in each of the 2 preceding calendar years?); as well as feedback on the appropriate implementation period for the proposed regulation. 

Click here for more information on the rulemaking; and here to visit the CFPB’s Small Business landing page, which includes a “Tell Your Story” portal for small business entrepreneurs. 

A Push for Streamlined PPP Forgiveness; Judge Orders Loan Data Be Made Public Posted by AVCU on 8:27 AM

 As Congress prepares to return from a lame duck session, some 100 business groups again are calling for the House and Senate to enact a streamlined application process for loan forgiveness for many paycheck loans.

In a new letter to congressional leaders, the groups, including CUNA, NAFCU, the American Bankers Association and the Independent Community Bankers of America, called on the House and Senate to enact legislation that would forgive all Paycheck Protection Program loans of up to $150,000 based on a one-page application.

The legislation also would expand the hold harmless protections for lenders, allowing them to focus their energy on providing much-needed credit and financial services, as the coronavirus crisis continues, the groups said.

“Businesses have been patiently awaiting for Congress to act, hoping that an improved and streamlined forgiveness process will ensure they can focus their time, energy and resources back into their business and communities instead of allocating significant time and expense into completing complex forgiveness forms,” the groups said.

In related PPP news, U.S. District Judge James Boasberg on Tuesday ordered the Small Business Administration to make public by Dec. 1 all names, addresses and precise loan amounts for businesses that received PPP loans or assistance under the Emergency Injury Disaster Loan program.

Several news organizations filed suit seeking that information after the SBA denied their requests under the Freedom of Information Act.

On Nov. 5, Boasberg ordered the data be made public by Nov. 19, but the SBA requested a stay in the order until Dec. 7 or until the agency filed an appeal.

In his ruling, Boasberg said the Dec. 1 deadline will give the Trump Administration enough time to decide whether to appeal his ruling.

Boasberg said the SBA’s decision harms the public’s ability to evaluate the program.

“That stands as an obvious impediment to any meaningful public inquiry regarding the overwhelming majority of loans, including whether certain types of businesses were over- or under-represented and whether the loans were distributed to qualifying recipients along equitable racial, gender and geographic lines,” he said.

He added that the agency’s lending programs remain a public concern because at “this very moment, congressional leaders and executive-branch officials are considering potential renewed stimulus packages, with the possibility of a new round of business loans.”

NCUA & FinCEN Issue Additional Guidance on Hemp Banking Posted by AVCU on 9:09 AM

 As the hemp baking industry continues to grow and stabilize, credit unions need to be kept up-to-date on how to adequately serve legal hemp-related businesses. The National Credit Union Association (NCUA) recently issued a Letter to Credit Unions providing additional guidance supplemental to a 2019 Regulatory Alert. Spurred by the effects of the COVID-19 pandemic on hemp-related businesses, the NCUA issued its letter for advisory purposes, providing no new expectations or requirements for credit unions.

When the Agricultural Act of 2018 (the 2018 Farm Bill) removed hemp from Schedule I of the Controlled Substances Act, the U.S. Department of Agriculture (USDA) was directed to establish a national regulatory framework for nationwide hemp production. This was done through an interim final rule establishing the U.S. Domestic Hemp Production Program. This rule will expire on December 31, 2021 if not replaced by a final rule.

The NCUA reminds credit unions that it is important to “stay current with the federal, state and Native American tribal laws and regulations that apply to any hemp-related businesses they serve.” The hemp-industry follows a patch work of state and local regulatory requirements. With the ever-growing landscape of the hemp industry and new COVID-19 considerations, it is crucial for the agency to continually provide guidance. The recent letter provides key clarifications under the 2018 Farm Bill and addresses frequently asked questions.

Some important guidance pulled from the NCUA’s letter includes the following:

• The USDA’s interim final rule does not de facto legalize hemp production in every state. A valid USDA-issued license or approval under a USDA-approved state or tribal plan is required to comply with the 2018 Farm Bill requirements. State or tribal laws were not preempted by the 2018 Farm Bill. The Agricultural Act of 2014 (the 2014 Farm Bill) allows for hemp production pursuant to research and development initiatives. However, this authority is set to expire on November 1, 2020. There have been recent legislative efforts to extend the pilot program under the 2014 Farm Bill.
• Additionally, the letter clarifies misconceptions regarding authority and oversight of the hemp industry. State and tribal governments are responsible for ensuring that hemp producers follow regulations in states and territories with approved plans. Those producers licensed with USDA in areas without production plans are subject to regulation and licensure by the USDA.
• The USDA rule only pertains to requirements for engaging in hemp production, not its manufacturing, processing, distribution, shipping, and retail. It is important for credit unions to understand that the uniform rules set forth by the USDA and other federal agencies only cover production, regardless of whether individual states impose additional requirements on other facets of hemp-related businesses.
• The NCUA brought attention to the significant interest in cannabis-derived products (CBD). However, the U.S. Food and Drug Administration (FDA) has reiterated that CBD products must comply with all other applicable state and federal laws even if the product meets the “hemp” definition under the 2018 Farm Bill. The FDA has confirmed that the legality of the sale of CBD products depends on their intended use and on their labeling and marketing. The Food, Drug, and Cosmetic Act (FDCA) is the leading applicable law relating to CBD.
• Credit unions are permitted to provide loans to a lawfully operating hemp-related business and many credit unions provide important financial services to businesses within their field of membership. Sound commercial practices apply to hemp-related lending, such as appropriate underwriting standards considering the borrower’s management ability, financial condition, and ability to meet all obligations and service the debt. Credit unions are expected to maintain due diligence for all hemp-related accounts. This includes verifying that hemp borrowers possess a valid state or USDA license.

While credit unions should be diligent in determining whether or not to extend a loan to a hemp-related business, they are not expected to serve as the enforcement authority to police the industry for illegal activity. In December 2019 federal banking officials, including the Financial Crimes Enforcement Network’s (FinCEN), removed some red tape by filing a joint statement notifying banks of the removal of the requirement to file suspicious activity reports (SARs) for customers growing hemp in accordance with applicable laws and regulations.

On the heels of NCUA’s most recent updates, FinCEN has also issued important guidance related to credit union’s due diligence requirements under the Bank Secrecy Act and anti-money laundering laws. While customer due diligence (CDD) is always required, further measures may be warranted for hemp-related businesses. At the outset, credit unions must obtain basic identifying information through a customer identification program and risk based CDD processes. Credit unions can confirm a hemp-growers compliance with state, tribal or USDA licensing requirements by obtaining (1) a written confirmation that the grower is validly licensed, or (2) a copy of the license. Any further due diligence steps should be based on the credit union’s assessment of the individual risk posed by each member. This additional information may include crop inspection or testing reports, license renewals, updated attestations from the business, etc. 

We anticipate additional guidance from various agencies once the USDA has a final hemp rule in place. NAFCU will continue to monitor news and guidance as it is released and keep you updated on regulatory and legislative changes to hemp banking.

MBL relief would allow small business to access essential CU credit Posted by AVCU on 8:12 AM

 Credit unions are robust business lenders and could do more to help with the pandemic recovery, CUNA wrote to the House Small Business Committee Wednesday for its hearing on transparency in small business lending. Specifically, CUNA reminded the committee that the member business lending cap of 12.25% of assets restricts capital from getting to Main Street businesses in need.

“We urge Congress to enact legislation that exempts credit union business loans made during federally declared disasters and emergencies from the arbitrary credit union business lending restriction,” the letter reads. “Failure to do so would represent a decision to leave critical assistance on the sidelines when small businesses, Main Street, and the nation’s economy need it the most.”

Both the House and Senate have introduced bills to exempt credit union member business loans from the cap for the duration of the COVID-19 pandemic and one year following, which CUNA strongly supports and urged the committee to include in upcoming legislation.

“CUNA conservatively estimates that temporarily removing the MBL cap will provide over $5 billion in capital to small and informal business ventures, creating nearly 50,000 jobs over the course of the next year - at no expense to the federal government,” the letter reads. “Furthermore, additional credit union lending will not impede bank lending activity. A majority of credit union lending does not replace lending that would otherwise be done by banks. SBA research specifically shows that roughly 80% of credit union business loans are loans that banks would not make.”

SBA Issues Procedural Notice Outlining Process for Lenders to Submit PPP Forgiveness Decisions Beginning August 10 Posted by AVCU on 9:39 AM

On July 23, 2020 the Small Business Administration (SBA) released a Procedural Notice to provide Paycheck Protection Program (PPP) lenders with the procedures required to submit PPP loan forgiveness decisions to SBA and to request payment of the forgiveness amount. The Procedural Notice also addresses SBA loan forgiveness reviews and payment of the loan forgiveness amount determined by SBA.

Lenders will use a new PPP Forgiveness Platform to upload and submit loan forgiveness decisions, supporting documentation, and requests for forgiveness payments. The PPP Forgiveness Platform will go live and begin accepting lender submissions on August 10, 2020, subject to extension if any new legislative amendments to the forgiveness process result in updates to the system.

To initiate the forgiveness process, a PPP borrower must submit the Loan Forgiveness Application (SBA Form 3508, 3508EZ, or lender equivalent) to its lender (or the lender servicing its loan).  The lender must review the Loan Forgiveness Application in accordance with the requirements of SBA’s PPP Interim Final Rule #15 , as revised by PPP Interim Final Rule #20, and:

• confirm receipt of the borrower certifications;
• confirm receipt of the documentation the borrower must submit to aid in verifying payroll and non-payroll costs
• confirm the borrower’s calculations on the borrower’s SBA Form 3508 or 3508EZ or Lender’s equivalent form.

Lenders are expected to perform a good-faith review, in a reasonable time, of the borrower’s calculations and supporting documents concerning amounts eligible for forgiveness. If the lender identifies errors in the borrower’s calculations or insufficient supporting documents, the lender should work with the borrower to remedy the issue. The lender must complete the review and issue a decision regarding forgiveness to SBA, along with the required documents, not later than 60 days after receipt of a complete application from the borrower.  SBA will generally remit the appropriate forgiveness amount to the lender, plus any interest accrued through the date of payment, within 90 days of the lender issuing its decision to SBA.  The lender is then responsible for notifying the borrower of the forgiveness amount paid by SBA to the Lender.

The lender is required to confirm the following when submitting a forgiveness decision to SBA:

• That the submission accurately reflects the lender’s decision regarding the borrower’s forgiveness application
• That the submission accurately reflects the lender’s records for the PPP loan
• That the lender has made its decision in accordance with previously issued SBA guidelines
• That the PPP loan has not been canceled or repaid
• That the lender has not issued a previous loan forgiveness decision to SBA for the same PPP loan, unless it is a re-submission following a rejection or a reconsideration of a denial without prejudice.

All PPP lender Authorizing Officials (AOs) currently in the CAFS/ETRAN system will receive a welcome email from SBA (PPPForgivenessRequests@SBA.gov) with instructions on how to access the new platform. If an AO does not receive a welcome email, it should contact SBA’s PPP Lender Hotline at 833-572-0502 for instructions.

SBA will be issuing an interim final rule addressing the process for a PPP borrower to appeal SBA’s determination that a borrower is ineligible for a PPP loan, or loan amount, or loan forgiveness amount claimed.

The Procedural Notice can be found here.

In addition to the Procedural Notice, SBA issued an Information Notice on July 22, 2020 to provide a brief overview of COVID-19 assistance available under SBA’s Economic Injury Disaster Loan (EIDL) Program, including both advances (grants) and direct loans.  The Information Notice also provides guidance to alert financial institutions to the potential for suspicious activity related to COVID-19 EIDL funds deposited into business or personal accounts and points of contact at SBA to report suspicious activity in the COVID-19 EIDL loan program. The Information Notice can be found here.

Congress passes bill to extend PPP deadline to Aug. 8 Posted by AVCU on 8:08 AM

The House and Senate passed a bill that would extend the deadline for applying for Paycheck Protection Program (PPP) loans. The president is expected to sign it shortly.

The bill, introduced by Senate Small Business Committee Ranking Member Sen. Ben Cardin (D-Md.), would extend the deadline for applying for PPP loans to Aug. 8.


Though the PPP still has approximately $130 billion in unspent funds, the program expired June 30 at midnight.

Credit unions are strong supporters of the PPP, but CUNA has engaged with Congress, the Treasury and Small Business Association with concerns about the program, including on the need for guidance on several matters and lender liability protection.

PPP forgiveness bill would remove regulatory hurdles

CUNA wrote in support of the Paycheck Protection Program (PPP) Forgiveness Act Wednesday, a bill that would simplify forgiveness of PPP loans under $150,000. The bill was introduced earlier this week by Sens. Kevin Cramer (R-N.D.), Bob Menendez (D-N.J.), Thom Tillis (R-N.C.) and Kyrsten Sinema (D-Ariz.).

“This bill will allow America’s small business owners and Main Street financial institutions to remain focused on serving their communities rather than jumping through burdensome regulatory hurdles. Specifically, this bill would provide forgiveness for Paycheck Protection Program (PPP) loans of $150,000 or less if the borrower submits an attestation form to the lender. It also ensures that the lender will be held harmless from any enforcement action if the borrower’s attestation contained falsehoods.”


America’s credit unions have issued thousands of PPP loans, including more than 60,000 loans averaging $49,000 each from the smallest credit unions.

PPP loan forgiveness clarity, liability relief needed Posted by AVCU on 2:39 PM

Credit unions are a vital component to the delivery of financial services to many Americans and credit union members should have equal access to the Paycheck Protection Program (PPP), CUNA wrote to Senate Small Business Committee leadership Wednesday.

The hearing was conducted to examine implementation of Title I of the CARES Act, which includes the PPP language.

Although the pace of PPP lending has slowed, CUNA notes operational challenges remain and should be addressed if additional funding is provided. These include:

• 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.

The letter also calls for Congressional action to relieve borrowers that carried out the PPP in good faith from any liability stemming from the structure and design of the PPP, as well as clarity on loan forgiveness, as the recently published loan forgiveness application is overly complex.

“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 SBA Administrator Jovita Carranza and a May 29 letter to Carranza and Treasury Secretary Steven Mnuchin.

Senate passes bill enhancing PPP flexibility Posted by AVCU on 8:12 AM

The Senate passed a measure late Wednesday to increase flexibility in the Small Business Association’s Paycheck Protection Program (PPP).

CUNA has called for further improvements to the PPP process, including lender liabilities and other challenges the Small Business Administration must address, most recently in a letter to the Senate Banking Committee.

Specifically, the measure would:

• Allow forgiveness for expenses beyond the eight-week covered period;
• Eliminate restrictions limiting non-payroll expenses to 25% of loan proceeds;
• Eliminate restrictions that limit loan terms to two years;
• Ensure full access to payroll tax deferment for businesses that take PPP loans; and
• Extend the rehiring deadline to offset the effect of enhanced Unemployment Insurance.

The President is expected to sign this legislation into law.

PPP loan forgiveness rules for lenders, borrowers released Posted by AVCU on 3:42 PM

The Small Business Administration (SBA) issued two interim final rules (IFRs) providing paycheck protection program (PPP) borrowers and lenders with additional information on loan forgiveness and the loan review process. The agency previously released the loan forgiveness application for borrowers; NAFCU has consistently sought additional guidance for lenders on the issue.

Key things for credit unions to know from the IFR on loan forgiveness:

• Application: In order to receive loan forgiveness, borrowers must complete the loan forgiveness application (Form 3508) and submit it to their lender. Lenders then have 60 days from receipt of a complete loan forgiveness application to issue a decision to the SBA; lenders are also responsible for notifying borrowers of loan forgiveness amounts. The SBA will remit payment to the lender no later than 90 days after the lender makes a decision. If only a portion of the loan is forgiven and a balance remains, the borrower must repay on or before the two year maturity.
• Payroll costs: Payroll costs must be incurred during the 8-week covered period. Borrowers may seek forgiveness for payroll costs for the 8 weeks beginning on either the date of the disbursement of the borrower's PPP loan (the start of the covered period), or on the first day of the first payroll cycle in the covered period (alternative payroll covered period). Payroll costs are considered paid on the day that paychecks are distributed or an ACH is originated. For employees who are not performing work but are still on the borrower's payroll, payroll costs are incurred based on the schedule established by the borrower. Payroll costs include salaries, wages, or commission payments to furloughed employees, and hazard pay. Loan forgiveness will not be reduced if the borrower laid-off or reduced hours, offered to re-hire an employee and the employee declined.
• Non-payroll costs: A non-payroll cost is eligible for forgiveness if it was paid during the covered period, or incurred during the covered period and paid on or before the next regular billing date, even if the billing date is after the covered period. Advance payments of mortgage interest are not eligible for loan forgiveness.

Additional information on reductions to the loan forgiveness amount and documentation requirements is available in the IFR.

The second IFR details the SBA's process for reviewing PPP loan applications and loan forgiveness applications, with specific information for lenders on the loan forgiveness process.

Of note, the IFR confirms that calculations are the responsibility of the borrower: "lenders are expected to perform a good-faith review, in a reasonable time, of the borrower's calculations and supporting documents concerning amounts eligible for loan forgiveness." Lenders must also:

• maintain records with the requirements of their regulators and in compliance with 13 CFR 120.461;
• respond to SBA requests to review a loan otherwise, if the lender does not respond to the inquiry, this will result in a determination that the borrower was ineligible for a PPP loan or ineligible to receive the loan amount or loan forgiveness amount claimed by the borrower;
• confirm receipt of the borrower certifications contained in the loan forgiveness application form;
• confirm receipt of the documentation borrowers must submit to aid in verifying payroll and non-payroll costs;
• confirm the borrower's calculations by reviewing the documentation submitted with the application; and
• confirm the borrower made the calculation on Line 10 of the application.

In addition, if the SBA reviews a loan and determines that a borrower is ineligible for the program, the lender is not entitled to reimbursement of processing fees. Read the full IFR here.

NAFCU will continue working closely with the SBA and Treasury to obtain more guidance, and with Congress as lawmakers consider changes to the program to make it easier for borrowers to use funds. Access NAFCU's PPP FAQs here; more information is also available on the SBA's and Treasury's websites.

Senate votes to approve $310B in additional PPP funds Posted by AVCU on 7:54 AM

The Senate voted Tuesday to approve an additional $310 billion in funds for the Paycheck Protection Program (PPP), re-funding the program after it ran out of funds last week. The PPP was originally funded at $349 billion by the CARES Act, and CUNA the Leagues and credit unions have been engaging with legislators since then to secure additional funding.

“At a time where small businesses across the country are struggling to remain afloat, this important legislation will ensure that hard working men and women across the country will be able to remain financially secure in spite of this pandemic,” said CUNA President/CEO Jim Nussle. “Since the enactment of the CARES Act, credit unions across America have been diligently connecting small business owners with these crucial funds, and this bill will allow them to continue in that service. We urge the House to pass the bill quickly so these funds can get to work helping our small businesses through this unprecedented emergency.”

The $310 billion contains a $60 billion set aside for community lenders, including  state and federal credit unions, with:

• $30 billion for loans made by insured depository institutions with between $10 billon and $50 billion in assets; and
• $30 billion for loans made by institutions with assets of less than $10 billion.  

CUNA called for such a set aside in its advocacy to Congress, noting that such an action would ensure small lenders are able to provide access to funds to Main Street businesses.

CUNA announces new small business lending COVID-19 webinar Posted by AVCU on 11:40 AM

Registration is now open for Navigating SBA Lending Programs in Response to the CARES Act & COVID-19 Pandemic webinar. This webinar, offered as a free CUNA member benefit, on April 15, from 11 a.m. to 12:30 p.m. (ET) gives credit union lenders the latest information on new Small Business Admnistration (SBA) loan programs and requirements.

“Many small business owners are strapped for cash and they’re looking to credit unions for immediate assistance to stay afloat,” says Kathy Smith, instructional design manager at CUNA. “This webinar prepares credit union teams to adjust their small business lending programs by covering the latest COVID-19 related lending regulatory changes, including new CECL provisions.”

Attendees will understand how to apply:

• Coronavirus Aid, Relief and Economic Security Act (CARES Act)
• Coronavirus Economic Stabilization Act (CESA)
• Economic Injury Disaster Loan Program
• 7(a) Paycheck Protection Program

Learn more and register webinar. Can’t attend the live webinar? Register for the recorded version.

Treasury, SBA issue FAQ document on PPP loans Posted by AVCU on 8:29 AM

The Treasury and Small Business Administration (SBA) released a frequently asked questions document on Paycheck Protection Program (PPP) loans, updated as of April 6. The PPP is a new loan product to help businesses affected by the coronavirus disease (COVID-19) pandemic meet certain expenses.

The SBA released an Interim Final Rule on the PPP last week, though CUNA, the American Association of Credit Union Leagues and Leagues have called for several changes to help credit unions serve members more efficiently.

According to the FAQ document, the U.S. government “will not challenge lender PPP actions that conform to this guidance, and to the PPP Interim Final Rule and any subsequent rulemaking in effect at the time.”

The document answers questions such as:

• Are small business concerns required to have 500 or fewer employees to be eligible borrowers in the PPP?
• Does my business have to qualify as a small business concern in order to participate in the PPP?
• Are lenders required to make an independent determination regarding applicability of affiliation rules under 13 C.F.R. 121.301(f) to borrowers?
• Are borrowers required to apply SBA’s affiliation rules under 13 C.F.R. 121.301(f)?
• Do PPP loans cover paid sick leave?
• What if an eligible borrower contracts with a third-party payer such as a payroll provider or a Professional Employer Organization (PEO) to process payroll and report payroll taxes?
• May lenders accept signatures from a single individual who is authorized to sign on behalf of the borrower?
• Are lenders permitted to use their own online portals and an electronic form that they create to collect the same information and certifications as in the Borrower Application Form, in order to complete implementation of their online portals?
• What time period should borrowers use to determine their number of employees and payroll costs to calculate their maximum loan amounts?
• Are PPP loans for existing customers considered new accounts for FinCEN Rule CDD purposes? Are lenders required to collect, certify, or verify beneficial ownership information in accordance with the rule requirements for existing customers?

The SBA has also posted a FAQ document on participation of faith-based organizations in the PPP.

CUs eager to serve members via PPP as SBA releases guidance Posted by AVCU on 8:26 AM

The Small Business Administration (SBA) published an Interim Final Rule Thursday, effective immediately, announcing the implementation of Sections 1102 and 1106 of the CARES Act. These sections address the “Paycheck Protection Program,” (PPP) a new product in the SBA’s 7(a) Loan Program.

“Credit unions are eager to serve their members and communities, and they want to help small businesses succeed through the SBA’s Paycheck Protection Program,” said CUNA President/CEO Jim Nussle. “The CARES Act was enacted less than a week ago and there have been a number of questions regarding the expectations for lenders under this program to be able to help numerous businesses weather financial challenges due to the growing and ongoing public health crisis. We appreciate the guidance that has been published this evening, and we are reviewing it closely.

“Nevertheless, the guidance was released hours before this program is set to begin and there are still a number of unanswered questions which will very likely complicate quick fulfillment of these critical loans,” Nussle added. “Credit unions will now begin the complex task of successfully implementing a $350 billion rescue program from the ground up, and we’ll be working tirelessly to do so.”

CUNA and Leagues look forward to working with credit unions and SBA so consumers can receive these loans expeditiously from their credit union.

Highlights of the guidance include:

• All SBA-certified 7(a) lenders are automatically approved to make PPP loans. In addition, any federally insured credit union and any federally insured depository institution that have been determined by SBA and the Treasury to meet the criteria outline in the CARES Act and are eligible to make PPP loans unless they currently are designated in Troubled Condition by their primary federal regulator or are subject to a formal enforcement action with their primary federal regulator that addresses unsafe or unsound lending practices.
• Eligible borrowers must have 500 or fewer employees and satisfy SBA definitions of “small business concern” or are a tax-exempt non-profit organization described in section 501(c)(3) or 501(c)(19) of the Internal Revenue Code, or are a Tribal business concern, and were in operation with employees or independent contractors on Feb 15, 2020. Sole proprietors or independent contractors or eligible self-employed individuals may also be eligible of in operation on Feb 15, 2020;
• A small business is eligible to borrow the lesser of $10 million or an amount that is calculated using a formula in the CARES Act. Payroll costs consist of:
• Compensation to employees in the form of salary, wages, commissions, or similar compensation;
• Payment for vacation, parental, family, medical, or sick leave;
• Allowance for separation or dismissal;
• Payment for the provision of employee benefits consisting of group health care coverage;
• Payment of state and local taxes assessed on compensation of employees; and
• Certain other costs.
• Loans guaranteed under the PPP will be 100% guaranteed by SBA, and the full principal amount of the loans may qualify for loan forgiveness;
• The interest rate on a PPP loan is 100 basis points or 1% percent. Loans have a two-year maturity;
• Any portion of the loan used to make payroll, pay for utilities, rent, mortgage, and existing business debt may be forgiven, dollar for dollar if workers remain employed through the end of June. The amount of loan forgiveness can be up to the full principal amount of the loan and any accrued interest;
• Payments do not need to be made for six months following the date of disbursement of the loan.  However, interest will continue to accrue on PPP loans during this six-month deferment.
• SBA will allow lenders to rely on certifications of the borrower in order to determine eligibility of the borrower and use of loan proceeds and to rely on specified documents provided by the borrower to determine qualifying loan amount and eligibility for loan forgiveness; and
• Lenders much comply with the applicable lender obligations but will be held harmless for borrower’s failure to comply with program criteria;

Additional information, including on lender’s fees, loan terms and conditions and more can be found on CUNA’s CompBlog.

Treasury/SBA issue information on $349B available for business lending Posted by AVCU on 8:19 AM

he coronavirus disease (COVID-19) relief legislation signed into law last week recognizes credit unions as part of several vital economic recovery programs, notably the $349 billion Paycheck Protection Program (PPP). Through the program, the Small Business Administration (SBA) will make available funds for small businesses to secure up to eight weeks of payroll costs including benefits, as well as to pay interest on mortgages, rent and utilities.

CUNA continues to engage with the SBA and Treasury on strong specific guidance on the PPP.


“Treasury and the Small Business Administration expect to have this program up and running by April 3rd so that businesses can go to a participating SBA 7(a) lender, bank, or credit union, apply for a loan, and be approved on the same day,” said Treasury Secretary Steven Mnuchin. “The loans will be forgiven as long as the funds are used to keep employees on the payroll and for certain other expenses.”

All existing SBA-certified lenders will be given delegated authority to speedily process PPP loans. All federally insured depository institutions are eligible to participate, and according to the Treasury, “a broad set of additional lenders can begin making loans as soon as they are approved and enrolled in the program.

New lenders will need to submit their application to DelegatedAuthority@sba.gov to apply with the SBA.

Starting April 3, small businesses and sole proprietorships can apply. Funds are provided in the form of loans that will be fully forgiven when used for payroll costs, interest on mortgages, rent, and utilities, and due to likely high subscription, at least 75% of the forgiven amount must have been used for payroll.

Loan payments will also be deferred for six months. No collateral or personal guarantees are required. Neither the government nor lenders will charge small businesses any fees. Loan forgiveness is based on the employer maintaining or quickly rehiring employees and maintaining salary levels. Forgiveness will be reduced if full-time headcount declines, or if salaries and wages decrease, according to the Treasury.

The Treasury has also created a one-page list of information for lenders, answering questions such as:

• Who is eligible to lend?
• Are the loan guaranteed by SBA?
• Are there guarantee fees?
• What underwriting is required?
• How will lenders be compensated?
• Who can be an agent?
• How will agents be compensated?
• Can these loans be sold on the secondary market?

The Treasury has also issued information for borrowers, as well as the application for borrowers.

CUNA staff attorneys, outside counsel and NCUA staff have analyzed credit unions’ eligibility as PPP borrowers, and agree that credit unions and other businesses “primarily engaged in the business of lending” are not eligible PPP borrowers. CUNA has joined other cooperatives in asking the SBA to allow cooperatives to participate in the program.

CUNA is working with SBA and NCUA to see if the SBA is willing to explore rule changes to make credit unions eligible for PPP through a change in SBA rules, as many credit unions could use access to these funds to provide economic relief and offset costs related to the pandemic.

Emergency CDFI, CDRLF funding needed to combat economic impact of coronavirus Posted by AVCU on 8:11 AM

CUNA wrote to House and Senate appropriations leaders Wednesday requesting emergency legislation to combat the effects of the coronavirus emergency on the ability of small businesses and individuals to access credit and basic financial services during this time of uncertainty.

Specifically, CUNA called for the Community Development Financial Institutions (CDFI) Fund and the Community Development Revolving Loan Fund (CDRLF) to be given an emergency infusion of funds, $300 million and $3 million respectively, separate and apart from fiscal year 2021 funding.

“Both of these funds support generally smaller financial institutions that serve people and small businesses that will likely be the first to feel the real-world effects of a missed paycheck or a cancelled order or contract,” wrote CUNA President/CEO Jim Nussle. “These small businesses and individuals will also likely be the first Americans in this current crisis to need access to emergency credit and other assistance available from their credit unions and other small community financial institutions.”

The CDFI Fund makes capital grants, equity investments and awards for technical assistance to CDFIs for community development initiatives such as small businesses, community facilities, and low-income housing. As of Feb. 18, there are 320 credit union CDFIs, out of 1,127 CDFIs nationwide.

The CDRLF is administrated by NCUA, and assists credit unions serving low-income communities in order to provide financial services and simulate economic activities in their communities.

“The CDFI Fund and the CDRLF are both designed to help the types of community-based financial institutions, like credit unions, that are perfectly positioned to receive this funding the quickest and then turn it around and provide emergency financial assistance to the people and small businesses that need it the most,” Nussle wrote. “Credit unions have a long history of providing low-interest loans and other types of financial assistance to individuals and small businesses during government shutdowns and natural disasters. This emergency funding request is a good investment and is fiscally prudent. Credit unions are often the exact types of community lenders that are perfectly suited to help someone make that mortgage payment or receive that small loan to pay their one or two employees.

“In this and any pandemic or natural disaster, these people are going to be the first hit first and the hardest hit in terms of financial impact. Credit unions, not predatory lenders, should be where these Americans turn for financial assistance,” he added.

Scammers exploiting coronavirus fears to steal information Posted by AVCU on 8:33 AM

The spread of the coronavirus is allowing bad actors to exploit fears and target consumer data, CUNA Chief Advocacy Officer Ryan Donovan wrote to all 535 Congressional offices Thursday. Donovan cites a recent NBC News article saying the disease is a “dream come true for criminals who will use it as basis for email attacks designed to snag personal information, steal money and infect computers with malware.”

“While you are hard at work trying to keep your constituents safe from the coronavirus disease, scammers are working just as hard to steal your constituents’ digital identities,” Donovan wrote. “We look forward to continuing to work with your office on data security and privacy legislation that will keep Americans' digital identities secure.”

The message links to information on CUNA’s advocacy efforts to secure data in order to make communities safer. CUNA is strongly pushing for Congressional action on a national data security and privacy standard that preempts state laws and applies to all entities that collect, use and store consumer data.

CUNA President/CEO Jim Nussle wrote in The Hill last week, during CUNA’s Governmental Affairs Conference, that data breaches aren’t going away and Congress needs to take definitive steps to protect consumer data.

CUNA has launched a resource page for information and other materials on the coronavirus (COVID-19) disease as they become available. CUNA is closely following all developments and will update the page as necessary with business continuity recommendations and information about CUNA/CUNA Council conferences and events.

Free Dec. 17 webinar examines Business Email Compromise scam Posted by AVCU on 10:19 AM

CUNA and the Financial Services Information Sharing and Analysis Center (FS-ISAC) will conduct a free webinar for CUNA members Dec. 17 designed to provide information on how credit unions can protect themselves from Business Email Compromise (BEC) scams. The webinar is scheduled for 3 to 4 p.m. (ET).

BEC scams target both individuals and businesses that perform wire transfers or other types of electronic fund transfers. Scammers use information available electronically to develop a profile on a company and staff, and eventually target specific individuals with what appears to be a legitimate business transaction.

However, the wire transfer is sent to an account controlled by the scammers, who then take the funds and disappear.

The FBI has been tracking these scams since they emerged in 2001, and have found organizations targeted in every U.S. state and more than 100 countries. Since January 2015, there has been a 1,300 percent increase in identified exposed losses, now totaling over $3 billion.”

Registration is currently open for the live version of the webinar. Those who register to watch live automatically receive access to the recorded version, others can register separately for just the recorded version, which will be available after the conclusion of the live event.

Suncoast CU to Buy $746M Miami-based Bank Posted by AVCU on 1:12 PM

Tampa Florida-based $10.4B Suncoast Credit Union, the 10th largest in the country, has announced plans to purchase Apollo Bank, a $746M financial institution headquartered in Miami. If plans go through, this would be the largest credit union purchase of a bank to date and will continue to shine the spotlight on such transactions. Multiple industry analysts have forecast that more deals of this magnitude and larger are expected to continue well into 2020.

Apollo Bank, which opened its doors in 2010, has approximately 100 employees and five branches in Miami’s Brickell Financial District, Doral, Coral Gables, Kendall and Hialeah markets. The bank has been profitable, making $8.9 million in 2018 and $5.4 million through September of this year.

“We are pleased and enthusiastic to bring the value of Suncoast Credit Union to this important community,” said Suncoast CEO Kevin Johnson. “Our excellent rates, low fees and community service will have a positive impact in South Florida. We look forward to the Apollo team joining our organization and continuing to serve their commercial customer base. Bringing the benefits of membership offered by Florida’s largest credit union to the diverse cultural population in Miami is a privilege that we take great pride in sharing.”

Apollo Bank CEO and Chairman Eddy Arriola, who will serve as Suncoast’s new South Florida market president added, “Apollo Bank has thrived by meeting the needs of South Florida businesses, delivering exceptional service, investing in our communities, and nurturing talent. Nearly a decade after launching, we realized that partnering with a larger institution would put our team in position to offer even more products and services to clients while allowing our bank to scale. After considering a range of options, it became clear that Suncoast Credit Union was the right partner. Suncoast is a Florida market leader that shares Apollo Bank’s deep-rooted commitment to client service and community involvement.”

The transaction is expected to close in 2020, subject to shareholder and regulatory approvals.

Kansas CUs Fend Off Statehouse Tax Threat Posted by Association of Vermont Credit Unions on 1:26 PM

According to reporting by CU Journal, earlier this month a Kansas state Senate committee met to SB.238, which would decrease the state income tax on banks, and also SB.239 to tax credit unions over $100 million in assets. Both bills were crafted by the Kansas Bankers Association.

On Tuesday of this week the 11-member committee voted to “not recommend” the credit union tax bill and decided to make “no recommendation” on the bank tax bill. Instead, the Kansas legislature called for more research data on the topic. The Kansas legislature's decision on the credit union taxation bill was a win for the the Heartland CU Association and the entire industry.

The CU association said that banks want a double standard in the form of creating a loophole so they can be taxed like not-for-profits without having to play by the same rules as not-for-profits. In its testimony, the association highlighted economic factors, including that banks control 99% of the commercial market in the Sunflower State.

Credit unions may only account for 1% of the commercial market, says the Association, but that includes small businesses and farmers that banks aren’t willing to take a chance on.  It also argued that Kansas has lost 244 credit union charters in the past five decades, declining from 322 credit unions in 1969 to 78 credit unions today.

The battle in Kansas is the latest banker state-level attempt to impose taxes or restrictions on credit unions. In February, the Nebraska Banking, Commerce and Insurance Committee considered a bill that would have required state regulators to notify banks whenever a CU applied to expand its field of membership. An in 2018, an effort to tax Iowa credit unions ultimately failed, but two credit unions were forced to change their names to comply with legislation that prohibits Iowa credit unions from using the name of state universities in their own name.

Read the original CU Journal article.

Fintech’s Fast Pass to Traditional Banking is Now Cut Off Posted by AVCU on 9:30 AM

Tech start-ups trying to become banks will now have to take a slower, more traditional route. (CNBC.com, 10/24/19)

Fintech companies had welcomed a special bank charter that cleared a quicker path for them to become a bank. But that was dealt a blow this week as a federal district court in New York decided that the Office of the Comptroller of the Currency, the regulator issuing the charters, didn’t have the authority to do so.

The ruling highlights the sometimes murky nature of tech companies getting into banking. It also means that finance start-ups will have to go through the same drawn out process as everyone else.

“It’s a step back for fintechs that are looking long term to become banks,” said Lindsay Davis, fintech analyst at CB Insights. “A fintech charter helped streamline that regulatory process for a company getting into the market.”

The “fintech charter” looked to expedite the process by allowing a start-up to offer lending or payments products without having to accept FDIC insurance, or comply with banking regulations state-by-state. A spokesman for the agency said it “disagrees with the decision and the court’s interpretation of the authority the National Bank Act grants the OCC”  and plans to appeal the ruling.

Without the special exception, getting a national bank charter tends to take around 18-24 months, according to Deloitte.

“This might be a longer process than fintechs would have anticipated — the other options are lengthy and cumbersome,” said Alaina Sparks, head of Deloitte’s fintech team. “The OCC charter sparked tremendous interest and got people thinking about new options.”

Advocates of the fintech charter said it would have increased competition by allowing new entrants to the financial system. But the ruling was a win for state regulators, many of whom wanted to block the pathway for fintech. They pushed back on non-banks’ potential to operate across the U.S. without needing to comply with state-by-state laws, which included caps on loan interest rates.

″The decision stops OCC’s attempt to usurp state authority by establishing a federal fintech regulatory framework at the expense of consumers,” New York’s superintendent of financial services, Linda A. Lacewell, said about the court ruling. “This decision makes the financial well-being of consumers from New York and around the country a priority."