Automatic cancellation of PPP loans is less costly for government and lenders | 2020-11-23
CUNA has joined over 100 consumer-focused organizations to appeal to the leadership of the Congress Quickly pass the paycheck protection program (PPP) forgiveness.
“Biparty and bicameral legislation was introduced earlier at this Congress and would reduce compliance costs by streamlining the forgiveness process for family businesses that received PPP loans during this unprecedented time,” the letter said. “In addition, the adoption of such legislation that would extend risk protection for lenders will provide financial institutions that have initiated and are currently managing PPP loans the opportunity to devote their time and energy to providing credit and vital financial services to individuals and businesses by creating regulations certainty for PPP lending in the future.
The Paycheck Protection Program Small Business Forgiveness Act (S. 4117) is sponsored by Sens. Kevin Cramer (RN.D.), Bob Menendez (DN.J.), Thom Tillis (RN.C.) and Kyrsten Sinema (D- Ariz.). The House version, HR 7777, is sponsored by Reps Chrissy Houlahan (D-Pa.) And Fred Upton (R-Mich.).
The letter cites independent analysis showing an actual cost of $ 2,000 to $ 4,000 for each company that asks for a pardon, requiring 20 to 100 hours of concentrated time from the top executives of those companies.
“With an average loan of less than $ 19,000 for the smallest 60% of loans, this estimate would represent 10 to 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 read.
CUNA has made numerous calls to Congress to include P3 forgiveness legislation in any forthcoming relief plan, including a letter from all leagues of state credit unions, and signed on a similar letter in September.