New PPP Rollout Has Been Smoother, but Problems Remain: CU Trades

Even though the first days of the new round of Paycheck Protection Program loans were reserved for Community Development Financial Institutions, CDFI credit unions faced nagging problems that kept the program from running efficiently, Inclusiv President/CEO Cathleen Mahon told the Small Business Administration last week.

For instance, she said, the program was rolled out before the program was fully constructed by the SBA and the Treasury Department. “Initial time was lost making sure the application and supplemental documents were adequately built on websites, staff trained, and borrowers prepared with new rules and processes,” she wrote in a letter to the agency.

But credit union trade groups said that in general, the rollout of the new round of PPP lending has gone smoother than earlier rounds.

The first two days of the second round of PPP lending were set aside for CDFIs, Minority Depository Institutions and similar financial firms. The third day, community financial institutions were able to begin accepting applications, followed by all SBA certified lenders.

Mahon said CDFI credit unions have had problems becoming certified, adding that those institutions have a “growing pipeline of applicants.” She added that there has been overlap between businesses applying for loan forgiveness for their first loans and borrowers applying for new loans. She said the overlap has eaten up precious time among commercial lending staff at credit unions and other small lenders.

Compared with the first round of PPP lending, when there were problems accessing the system amid concerns that money would run out, the new lending round has been quiet, CUNA Chief Advocacy Officer Ryan Donovan said.

He added there have been some problems, but added, “Frankly, given that a new round of lending has begun at the same time that the administration has changed, I would have been surprised if there weren’t issues.”

Donovan said throughout the life of the PPP program, SBA guidance has “been playing catch-up,” adding that the agency and the Treasury Department have been attempting to smooth out those issues.

NAFCU officials also said they believe that the reboot of the PPP has been smoother for credit unions, although there have been a few operational hurdles, according to Carrie Hunt, the trade group’s EVP of government affairs and general counsel.

“While credit unions are working around the clock to meet member demand, we encourage the SBA and Treasury to continue to identify areas for improvement and quickly release additional guidance to further simplify the process,” Hunt said. “This program has been a vital financial lifeline to our nation’s small businesses amid the coronavirus pandemic, and credit unions are delivering for their members and communities.”