Removing Barriers Blog

CUNA and Leagues write to Treasury with Credit Union PPP Concerns
Posted April 16, 2020 by CUNA Advocacy

Earlier this week, CUNA and Leagues wrote to Treasury Secretary Mnuchin about the challenges credit unions have been facing with implementing the PPP and concerns with the program.

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.