STATE GOVERNMENT RELATIONS
Holcomb Continues to Delay Entry Into Final Reopening Stage
Gov. Eric Holcomb announced on Wednesday that he is extending the already-delayed entry into the final phase of Indiana’s Back on Track reopening plan, Stage 5. He said he plans to continue with newly created Stage 4.5 that still requires certain restrictions on businesses and gatherings. The governor noted that the delay will extend at least through the end of July.
FEDERAL GOVERNMENT RELATIONS
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. As referenced in the story above, 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.
Lender Alert on EIDL Suspected Fraud
The U.S. Small Business Administration Office of the Inspector General released a lender alert regarding suspected fraud in the Economic Injury Disaster Loan program. EIDLs are intended to help eligible small businesses with expenses including fixed debts, payroll, accounts payable and other eligible bills. The alert included possible warning signs of suspected fraud:
• Using stolen identities to qualify for funds
• Applications from ineligible persons (nonbusiness entities, suspended or debarred individuals, etc.)
• Fake businesses established specifically to apply for SBA assistance
• Borrowers working with third parties to obtain Economic Injury Disaster Loan funds in exchange for keeping a percentage of the funds
• Borrowers using economic injury loan money to start businesses
• Misuse of loan funds
• Reporting inflated business and financial information, etc.
• Borrowers declining loans after advance funds have been deposited
Lenders who suspect attempted fraud should contact the National Center for Disaster Fraud Hotline at 866-720-5721 or fill out the Web Complaint Form. Lenders may also report fraud, waste, abuse, or mismanagement of federal funds involving SBA programs, operations, or personnel to the SBA OIG Hotline at 800-767-0385. You can also submit a complaint form here.
Fed’s Brainard Warns of Continued Economic Uncertainty as COVID-19 Cases Spike
Federal Reserve Governor Lael Brainard on Tuesday warned of heightened uncertainty “as long as the pandemic hangs over the economy.” She pointed to spikes in reported COVID-19 cases in recent days as many state economies began to reopen, noting that recent improvements in the labor market may not be sustained if widespread shutdowns are again needed to contain the outbreaks.
While crediting the Fed’s swift actions in the early days of the pandemic to support market operations, “a broad second wave could re-ignite financial market volatility and market disruptions at a time of greater vulnerability,” Brainard said in remarks at a National Association for Business Economics virtual event. “Nonbank financial institutions could again come under pressure, as they did in March, and some banks might pull back on lending if they face rising losses or weaker capital positions.”
Brainard added that “with a dense fog of COVID-related uncertainty shrouding the outlook, the recovery likely will face headwinds for some time, calling for a sustained commitment to accommodation, along with additional fiscal support.
FSOC to Conduct Assessment of Secondary Mortgage Market
The Financial Stability Oversight Council has announced that it plans to undertake an activities-based review of the secondary mortgage market to assess both the risk that activities in the secondary mortgage market pose to the stability of the financial system and the efficacy of various risk mitigants.
Federal Housing Finance Agency Director Mark Calabria welcomed this action by FSOC, noting that “as demonstrated by the 2008 financial crisis and again by COVID-19, Fannie Mae and Freddie Mac must be well capitalized in order to support the mortgage market during a stressed environment.”
SBA Provides Guidance on Monthly Form 1502 Filings; First Report Due Today
On Monday, the Small Business Administration provided guidance on the monthly Form 1502 reports that lenders must file on unpaid or unforgiven PPP loans. The report is due on the 15th of each month or on the next business day after the 15th, if it falls on a weekend or holiday. For this month only, SBA provided a two-day grace period, making the first monthly filing deadline Friday, July 17.
Lenders should continue filing monthly reports until their PPP loans are forgiven or repaid in full, according to the SBA. The procedural notice also includes newly added guidance on how lenders should report a canceled PPP loan on Form 1502.
Meanwhile, SBA reported that PPP loans now total 4.9 million amounting to $517.4 billion.
View the latest PPP loan figures
IBA COVID-19 Updates
The IBA has several COVID-19 resources and updates available at our website.