COVID-19 UPDATES
PPP Loans Total $510B as of May 30
A total of 4.48 million Paycheck Protection Program loans have been made to small businesses over two rounds of funding, totaling over $510 billion as of May 30, the Small Business Administration reported yesterday. Banks with less than $10 billion in assets made 44% of all PPP loans to date. Banks between $10 and $50 billion made 20% of all PPP loans, while banks over $50 billion accounted for 37%. The overall average loan size was $114,000.
In Indiana, 74,045 PPP loans were made, totaling $9,359,675,711.
House Republicans Call for Streamlined PPP Forgiveness Application
A group of House Republicans – led by Reps. Andy Barr (R-Ky.) and French Hill (R-Ark.) – wrote to Treasury Secretary Steven Mnuchin and Small Business Administration Administrator Jovita Carranza last week urging them to simplify the process Paycheck Protection Program borrowers must go through to have their loans forgiven. The letter included four members of the Indiana Congressional delegation: Rep. Larry Bucshon, Rep. Jim Banks, Rep. Greg Pence and Rep. Jim Baird. Rep. Susan Brooks is also expected to join the letter.
With many small borrowers indicating that they would likely need to hire outside counsel to ensure compliance with the PPP forgiveness terms, the lawmakers called for SBA and Treasury to tailor the forgiveness application based on the size and complexity of the loan. For PPP loans under $350,000, the lawmakers recommended a streamlined forgiveness application that “could consist of basic reporting by small businesses on how much they received and a good faith certification that they spent the funds in compliance with the requirements for forgiveness.”
“A streamlined forgiveness application would ease the burden on both borrowers and lenders of smaller PPP loans, consistent with congressional intent, while at the same time allowing Treasury and the SBA to focus its scarce and valuable resources on the program’s higher risk and larger dollar-value loans,” the lawmakers wrote.
Governor Announces New Small Business Grant Program
On Friday, Gov. Holcomb announced the creation of a new Indiana small business support grant program. The Small Business Restart Fund appropriates $30 million from the states CARES Act funds to assist Indiana’s small businesses that have experienced economic hardship as a result of the pandemic. Eligible businesses must have fewer than 50 employees and up to $5 million in annual review that has experienced at least a 40% drop. A total of $10,000 in support is available per company.
OCC’s Brooks: Agency to Reopen Offices on June 21
After months of remote work in response to the coronavirus pandemic, the OCC will reopen its offices on June 21, Acting Comptroller Brian Brooks said in a podcast interview on Friday.
“In-person supervision is such an important part of the OCC’s DNA,” Brooks said. “Bank supervision can’t really happen remotely … Fraud usually gets detected by walking the hallways and sitting in meetings and observing nonverbal cues which lead you to learn things. That can’t necessarily be done by a scheduled Zoom call; you have to be there.”
Listen to or read the interview
FDIC Issues CRA Exam Schedules
The FDIC issued the lists of institutions scheduled for Community Reinvestment Act examinations during the third and fourth quarter of 2020, as required by law. The schedules are based on the best current information and are subject to change, the agency indicated.
OCC Issues Long-Awaited Final Rule Clarifying ‘Valid When Made’ Principle
The OCC issued a long-awaited final rule on Friday affirming that permissible interest on a loan made by a national bank or federal thrift remains valid when the loan is transferred or sold, codifying the “valid when made” principle for nationally chartered banks. Under the final rule, which was adopted as proposed, federal regulations would provide that interest on permissible loans “shall not be affected by the sale, assignment, or other transfer of the loan.”
The so-called “Madden fix” addresses a Second Circuit Court of Appeals ruling in Madden v. Midland Funding, which held that a nonbank buyer of a loan issued by a national bank could not export the originated interest rate into another state. The Supreme Court declined to take up an appeal of Madden, resulting in conflicting precedent around the country and increasing the urgency of regulatory or legislative action.
“The rule supports the orderly function of markets and promotes the availability of credit by answering the legal uncertainty created by the Madden decision,” said Acting Comptroller of the Currency Brian Brooks. “Such certainty allows secondary markets to work efficiently and to serve their essential role in the business of banking and helping banks access liquidity and alternative funding, improve financial performance ratios, and meet customer needs.”
The FDIC has also issued a similar proposal ensuring that “valid when made” is codified for both national and state-chartered banks.
ICYMI - House Passes PPP Reform Bill
The House voted 417-1 to pass legislation to ease restrictions on the Small Business Administration’s Paycheck Protection Program last Thursday.
H.R. 7010: Paycheck Protection Program Flexibility Act of 2020, sponsored by Reps. Dean Phillips (D-Minn.) and Chip Roy (R-Texas), extends the time for businesses to spend the money from eight to 24 weeks and lowers the amount that must be spent on payroll costs from 75% to 60%.
ICYMI - Agencies Issue FAQs on Coronavirus, CRA Activities
The Office of the Comptroller of the Currency has released a list of 13 interagency frequently asked questions related to the Community Reinvestment Act and the coronavirus pandemic. Among other topics, the document clarifies that:
• The agencies will consider COVID-19-affected areas under major disaster declarations (including all 50 states, D.C., and certain territories) as disaster areas for CRA purposes for a period extending six months after the disaster declaration is lifted.
• Banks will receive favorable CRA consideration for “community development activities that are responsive to community needs and conducted in response to COVID-19.”
• A bank may receive CRA consideration for activities in broader statewide or regional areas that include the bank’s assessment areas.
• Paycheck Protection Program loans will be considered “particularly responsive” to community needs when made to businesses with gross annual revenues of $1 million or less or to businesses located in low-to-moderate-income geographies or distressed or underserved non-metropolitan, middle-income locales.
• PPP loans of $1 million or less or that create jobs for LMI individuals or in LMI areas generally qualify as community development loans. (Larger PPP loans may otherwise qualify if they meet the test.)
• Main Street Lending Program loans that meet relevant CRA requirements may receive CRA consideration.
• Bank activities to promote housing stability for LMI renters experiencing financial hardship due to COVID-19 “are considered particularly responsive to the unique challenges presented by the COVID-19 emergency.”
• Cashing Economic Impact Payment checks for non-customers at no charge and waiving late fees and overdraft charges are examples of “particularly responsive” services for LMI individuals.
IBA COVID-19 Updates
The IBA has several COVID-19 resources and updates available at our website.