COVID-19 UPDATES
SBA Rule Addresses PPP Forgiveness Questions for Biz Owners, Non-Payroll Costs
The Small Business Administration yesterday issued an interim final rule addressing certain technical issues of Paycheck Protection Program loan forgiveness related to business owners and certain non-payroll costs. SBA revised the PPP’s owner-employee compensation rule addressing the amount eligible for forgiveness to exempt employees who own less than 5% of a C-corp or S-corp borrower, determining that owner-employees at this threshold cannot meaningfully influence decisions about the use of PPP loan proceeds.
With regard to forgiveness for non-payroll costs, SBA clarified that monies attributable to tenants or sub-tenants of a PPP borrower or, for home-based businesses, household expenses do not qualify for forgiveness. The rule provides examples. Rent payments to a related third party are eligible under certain conditions outlined in the rule. Read the interim final rule.
ICYMI - Agencies to Host PPP Loan Forgiveness Webinar
The federal financial regulatory agencies and the Conference of State Bank Supervisors will host a joint webinar for bankers on Thursday, Aug. 27, at 11 a.m. EDT to discuss the forgiveness process for Paycheck Protection Program loans, as well as other recent changes to the program.
Action Alert: Ask Congress to Request FHFA and GSEs to Rescind Refinance Fee
Last week, Fannie Mae and Freddie Mac announced that they will impose an “adverse market refinance fee” of 50 basis points for no-cash-out and cash-out refinance mortgages with delivery dates on or after Sept. 1, 2020 (for Fannie Mae loans), or with settlement dates on or after Sept. 1 (for Freddie Mac loans). This fee – which would amount to an additional $1,400 for the typical consumer, based on the average GSE loan size – would either be paid upfront or be added to the mortgage interest rate.
This directive challenges current efforts by policymakers to support homeowners who are already struggling with the COVID-19 pandemic. Congress must speak up on this issue and urge the FHFA to repeal this deeply misguided policy. The American Bankers Association and Independent Community Bankers of America joined with several other financial services, housing and consumer groups in a joint statement to strongly criticize this action by the GSEs and called for the withdrawal of the fee.
Please contact your senators and representatives and ask them to contact FHFA Director Mark Calabria and the CEOs of the GSEs to insist that they immediately withdraw this new refinance fee.
Action Alert: Urge House Members to Pass H.R. 7777 to Forgive PPP Loans of $150,000 and Under
The U.S. House of Representatives recently introduced legislation to simplify the forgiveness process for Paycheck Protection Program loans of $150,000 and under by having borrowers sign a simple form attesting that the funds were used according to the PPP loan requirements.
Action Alert: Ask the Senate to Simplify Forgiveness for PPP Loans $150,000 and Under
The IBA is asking members to contact their senators in an effort to increase support for S. 4117, the Paycheck Protection Program Small Business Forgiveness Act. This bill has broad support from national trade associations and state banking associations across the country. Please contact your senators today and ask for their support to pass this legislation that will expedite the forgiveness process for the majority of borrowers that received loans through the PPP.
IBA COVID-19 Updates
The IBA has several COVID-19 resources and updates available at our website.