NAFCU Says It's a 'Step in the Right Direction' for Simplified PPP Forgiveness Application

With the prospect of any new stimulus legislation murky, the Trump Administration Thursday rolled out a simplified Paycheck Protection Program loan forgiveness application for businesses that borrowed $50,000 or less.

“We are committed to making the PPP forgiveness process as simple as possible while also protecting against fraud and misuse of funds,” Treasury Secretary Steven Mnuchin said.

Financial services trade groups, including CUNA and NAFCU, have been pushing for legislative changes that would allow automatic loan forgiveness for all loans under $150,000. However, such changes could not be made by the Treasury Department or the Small Business Administration, but instead would require legislation passed by Congress and signed by President Trump.

In recent weeks, Mnuchin and House Speaker Nancy Pelosi have been discussing the contents of a comprehensive coronavirus economic stimulus bill. However, the two sides have not reached agreement and President Trump this week has delivered conflicting messages, first putting the kibosh on any legislation before the election, and then urging negotiators to continue their efforts.

“We continue to favor additional legislation to further simplify the forgiveness process,” Mnuchin said Thursday.

The administration said that the SBA began approving PPP forgiveness applications and sending payments to PPP lenders on Oct. 2.

In a rule authorizing the simplified application, the Trump Administration said it has determined that the form strikes an appropriate balance between the desire for simplification and the responsibility to protect the integrity of the program.

The administration said it estimates that the total value of loans qualifying for the simplified application is about $49 million or 9% of the overall PPP loan amount.

In the rule, the administration reiterated its statement that providing an accurate calculation of the loan forgiveness amount is the responsibility of the borrower and not the lender.

NAFCU said it was pleased with the new application process.

“We appreciate the SBA and Treasury’s commitment to streamlining the PPP loan forgiveness process, and the agency’s new forgiveness application for loans under $50,000 is a strong step in the right direction,” NAFCU President/CEO B. Dan Berger said.

NAFCU and CUNA have endorsed legislation introduced in both houses that would provide automatic loan forgiveness for loans of $150,000 or less.

“Instead of jumping through burdensome regulatory hurdles, America’s small business owners and Main Street financial institutions will be able to focus on serving their communities,” CUNA President/CEO Jim Nussle said in endorsing those measures.

However, a government watchdog group, Accountable.US, said there has been sufficient fraud uncovered in the PPP program to justify public disclosure of how much of each loan made has been forgiven.

“In order to ensure proper oversight of the process, the public deserves to know which businesses have had their loans approved for forgiveness and which have been denied,” Kyle Herrig, the group’s president, wrote in a letter this week to SBA Administrator Jovita Carranza.