Senate passes PPP expansion with credit union carve-out
WASHINGTON — The Senate voted Tuesday to expand relief to small businesses affected by the coronavirus and to allocate more funds for loans provided by smaller lenders, including credit unions and community banks.
The new legislation meant to contain the economic effects of the pandemic would authorize an additional $250 billion for the Small Business Administration’s Paycheck Protection Program. The bill also makes an additional $60 billion available for loans specificially made by institutions with less than $50 billion of assets, half of which is designated for banks and credit unions under $10 billion of assets.
Out of more than 5,000 credit unions, only 10 have assets over $10 billion, and some of the nation's largest CUs have not moved ahead on PPP loans.
The Senate passed the measure by voice vote. The House is expected to vote on the bill later this week.
“This bipartisan agreement will provide more ... funding for the Paycheck Protection Program, which is already helping millions of small-business employees receive paychecks instead of pink slips,” said Senate Majority Leader Mitch McConnell, R-Ky. “At [Senate Republicans’] request, there will now be a special focus on community banks and credit unions.”
Democrats had pushed for additional funding for states and municipalities, as well as a national coronavirus testing system. The legislation includes an additional $50 billion for the SBA’s disaster loans program, $10 billion for emergency economic injury disaster grants, $75 billion for hospitals and an additional $25 billion for state-led testing efforts.
The additional funding comes after the SBA announced last week that the financial resources for PPP loans — authorized under the previous $2 trillion coronavirus rescue package — were depleted. Congress in March authorized $349 billion in SBA funds for the Paycheck Protection initiative, which was launched April 3.
"I am glad to see a deal has been agreed to that replenishes Paycheck Protection Program funding," said Rep. Patrick McHenry of North Carolina, the top Republican on the House Financial Services Committee. "We must get this legislative package to President Trump’s desk immediately so struggling small businesses and their workers get aid now."
House Speaker Nancy Pelosi, D-Calif., and Senate Minority Leader Chuck Schumer, D-N.Y., said Democrats will push additional legislation to help workers and businesses affected by the coronavirus.
“As soon as it has passed in the House, we will advance CARES 2, which must be transformative and far-reaching," Pelosi and Schumer said in a joint statement. "CARES 2 must recognize that the key to getting Americans back to work and ensuring economic security is putting the health and safety of the American people first and defeating this terrible virus.”
Credit union trade groups, which lobbied hard to ensure lawmakers set aside a carve-out for the industy, cheered the bill's passage.
“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,” Jim Nussle, president and CEO of the Credit Union National Association, said in a statement.
“These funds will go a long way toward ensuring America’s small businesses and communities receive the financial support they need to rise above the economic challenges presented by the coronavirus pandemic," said Dan Berger, president and CEO of the National Association of Federally-Insured Credit Unions.
Aside from PPP, a bill was introduced last Friday that would exempt credit union commercial loans made to help with the COVID-19 relief effort from counting against the member business lending cap.