STATE GOVERNMENT RELATIONS
Indiana Rental Assistance Program Applications Exceed 20,000
As of July 29, the Indiana COVID-19 Rental Assistance Program has received more than 20,000 applications for rental assistance. This program, administered by the Indiana Housing & Community Development Authority, has $25 million available for renters who are struggling to pay rent due to COVID-19-related challenges. The program excludes Marion County residents due to the existence of a Marion County-specific rental assistance program already available.
More information is available at indianahousingnow.org. Those needing mortgage assistance are encouraged to access the Indiana Foreclosure Prevention Network, which provides Hardest Hit Funds to homeowners who have fallen behind on their mortgages. For more information, visit 877gethope.org.
FEDERAL GOVERNMENT RELATIONS
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. Several IBA members have already contacted Indiana’s two U.S. senators encouraging them to pass similar legislation. Now we need your support by asking your U.S. representative to pass H.R. 7777 quickly to make the PPP forgiveness process simple and less complicated for small business owners. Contact your representative today and ask for help to ease the burden on small businesses by passing legislation to forgive PPP loans of $150,000 or less.
Powell: Economic Outlook to Depend on Course of Coronavirus
With the economy still experiencing significant disruptions due to the coronavirus pandemic, the Federal Reserve will maintain the target range for the federal funds rate at 0% to 0.25%, the Federal Open Market Committee announced Wednesday. The committee noted that “overall financial conditions have improved in recent months,” but that “the path of the economy will depend significantly on the course of the virus.”
In a press conference after the release of the FOMC statement, Fed Chairman Jerome Powell noted that while some areas of the economy – such as job gains and consumer spending – have rebounded “sooner and stronger than we expected,” incoming data tracked by the Fed suggest some slowdown since coronavirus cases began to spike again in June.
“Some measures of consumer spending based on credit card and debit card data have moved down,” Powell said. “Recent labor market indicators point to a slowing in job growth, particularly among smaller businesses. Hotel occupancy rates have flattened out, people aren’t going out to restaurants, bars, gas stations, pharmacies and beauty salons as much … On balance, it looks like the data are pointing to a slowing in the pace of the recovery. But I want to stress that it’s too early to say both how large that is and how sustained it will be.” Powell also warned that the second-quarter GDP contraction is “likely to be the largest on record.”
IRS Finalizes Guidance Addressing Business Interest Expense Deduction Limitations
The Internal Revenue Service Tuesday night released a long-awaited package of final regulations addressing restrictions on deducting net interest expense, pursuant to the 2017 tax reform law. The regulations generally apply to taxpayers with defined levels of gross receipts and restrict the deductibility of net interest expense to an amount that does not exceed a certain percentage of a taxpayer’s adjusted taxable income. Since the restriction applies to net business interest expense, and banks have net business interest income, the regulations should not apply to banks as taxpayers – but they will affect certain bank customers.
The IRS also released proposed regulations that provide additional guidance on various business interest expense deduction limitation issues that were not addressed in the final regulations. It also issued a notice providing a safe harbor and a set of FAQs on aggregation rules that apply for purposes of the gross receipts test and that apply to determine whether a taxpayer is a small business that is exempt from the business interest expense deduction limitation.
Fed to Extend Lending Facilities Through Year-End
The Federal Reserve on Tuesday announced that it would extend several lending facilities that were set to expire on or around Sept. 30 to year-end. The extensions apply to:
• The Primary Dealer Credit Facility
• The Money Market Mutual Fund Liquidity Facility
• The Primary Market Corporate Credit Facility
• The Secondary Market Corporate Credit Facility
• The Term Asset-Backed Securities Loan Facility
• The Paycheck Protection Program Liquidity Facility
• The Main Street Lending Program.
The Fed’s Municipal Liquidity Facility is already set to expire on Dec. 31, and the Commercial Paper Funding Facility is set to expire on March 17, 2021.
FDIC Rescinds Guidance on Deposit Advance Services
The Federal Deposit Insurance Corp. last week formally rescinded its 2013 guidance on deposit advance products after announcing the move last May. The action removes a key barrier that had discouraged banks from entering or establishing small-dollar credit products that are economically sustainable while meeting the needs of bank customers.
The 2013 guidance established prescriptive supervisory expectations for underwriting, credit risk monitoring and limits on customer usage that caused almost all banks to discontinue those services. The FDIC last May joined the other federal banking agencies in issuing interagency lending principles that encouraged banks and credit unions to offer small-dollar loans but conflicted with the 2013 guidance.
IBA COVID-19 Updates
The IBA has several COVID-19 resources and updates available at our website.