Credit unions and smaller banks could be a step closer to getting designated funds in the next phase of the Paycheck Protection Program.
Congress is negotiating a new round of stimulus that could add as much as $310 billion to the program, said sources familiar with the discussions. Lawmakers are looking at setting aside $50 billion to $60 billion for banks and community development financial institutions with less than $50 billion in assets, said one of the sources, who asked not to be named.
A separate source indicated credit unions could also be a part of that, though those details have not yet been finalized. There are indications language in the bill, which has not yet been made public, could be more generalized, with funds targeting CDFIs and minority depository institutions, rather than a specific type of FI.
“Credit unions are doing their part to help small businesses during this crisis, but the SBA process is cumbersome and seems, at least anecdotally, to favor the biggest lenders," said John McKechnie, a credit union consultant who works closely on legislative issues for the industry. "That’s why there is buzz on Capitol Hill that Congress will set aside dedicated funding in PPP for credit unions and other small lenders. If the federal government want this job done right, they should give credit unions the tools to do it.”
Trade groups representing both industries — including the National Association of Federally-Insured Credit Unions, Credit Union National Association and Independent Community Bankers of America — have
There are also efforts to curb how much individual lenders could originate during the PPP’s next round.
Sen. Marco Rubio, R-Fla., tweeted last weekend that he wants the Treasury Department, one of the program’s administrators, to limit the amount of Paycheck Protection loans a single lender makes to “no more than 5% of the new funds being approved.”
No lenders crossed that threshold in the first round.
Toronto-Dominion Bank plans to give most employees the option to return to the office this month and is aiming for workers to officially transition to their new working models by June.
The Biden administration once again extended the pause on student loan payments enacted to help borrowers during the COVID-19 pandemic, this time through the end of August.
Employees will still have some flexibility to work from home, but are strongly encouraged to collaborate with colleagues in person, according to people familiar with the matter.
JPMorgan Chase, the program's biggest participant, had $14 billion in PPP loans approved, or about 4% of the total. Truist Financial said it had $10 billion in volume, or roughly 2.9%.
The program launched on April 3 with $349 billion in funding designed to help employees of small businesses harmed by the coronavirus outbreak. The Small Business Administration, which was running the program through its 7(a) platform, stopped taking applications 13 days later when it reached its authorization cap.
Paul Davis and Aaron Passman contributed to this article.
