Week ahead: PPP 2.0, commercial lending bill introduced and more

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With the Small Business Administration’s Paycheck Protection Program currently on hold after the first round of monies ran out faster than expected, credit union groups are pushing Congress to fund a second wave in order to boost lending at small institutions to keep businesses afloat.

“America's credit unions have been hard at work to connect small businesses with these critical loans, but we all know the funds have now been depleted and the need remains significant. Please work swiftly to support small business employees by providing additional funds for the PPP so they can continue to support their families through this unprecedented crisis,” Ryan Donovan, chief advocacy officer at the Credit Union National Association, wrote in a letter to Congress last week.

The trade group has also called for additional clarity from the National Credit Union Administration on how PPP loans work in conjunction with member business lending requirements.

U.S. Rep Brad Sherman, D-Calif., last week introduced legislation that would exempt any commercial loans credit unions make to assist with recovery from the MBL cap, which currently stands at 12.25%. That bill has garnered more than a dozen cosponsors, but remains a contentious issue with banks. The American Bankers Association has argued that the industry is using the current crisis as a workaround “to quietly ease longstanding commercial lending limits.”

In a response to that bill’s introduction, the National Association of Federally-Insured Credit Unions called the MBL cap “arbitrary” and emphasized that in the middle of the pandemic Congress should amend the Federal Credit Union Act in order to “provide credit unions with greater flexibility and relief from the MBL cap so they can increase amounts to lending to the nation’s small businesses that are in need.”

Congress is not expected to return to Washington for at least two weeks and it remains unclear whether a bill amending the current MBL structure — even on a temporary basis — could gain traction.

While many of the nation’s top banks have issued their first-quarter earnings reports, credit unions aren’t required to file Q1 call reports until this coming Sunday. However, they could have some wiggle room on that deadline for the first time since 2014 after NCUA said it would not penalize credit unions who submit first-quarter filings within 30 days of the original deadline.

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Law and regulation Coronavirus Paycheck Protection Program Regulatory relief MBL Commercial lending SBA NCUA