More PPP Money Will Be Needed to Help Recovery, Nussle Tells Congress

The Paycheck Protection Program is likely to need more money to assist U.S. small businesses in recovering from the pandemic, CUNA/President Jim Nussle warned this week.

In a letter to the Senate Small Business Committee, Nussle said the last coronavirus crisis legislative package included $284 billion in new PPP loan funds, but that more will be needed. “This funding is much needed but likely insufficient to cover the need of struggling small businesses,” he wrote to the committee, which was considering the nomination of Isabella Casillas Guzman to head the Small Business Administration. “We urge Congress to consider additional PPP funding in 2021.”

However, a researcher at a conservative think tank disputed the notion that more PPP funds will be needed.

“Of the additional $284 billion provided for PPP in the December stimulus package to be disbursed through March, only 36% had been obligated as of February 7,” Joel Griffith, a research fellow in financial regulations at the Heritage Foundation, told the Senate Banking Committee on Thursday.

“More federal funding of private enterprise crowds out private capital from the credit market,” he told the committee. “Our credit markets serve an important function of efficiently allocating resources across the economy.”

The SBA reported that as of Feb. 21, slightly almost one million loans, totaling almost $140.3 million, have been made by 5,158 lenders from the funding provided at the end of the year.

The SBA also reported that 802 credit unions with assets of less than $10 billion have made loans from those funds, while eight credit unions with assets of more than $10 billion have participated.

Congress should look beyond the PPP loan program, NAFCU Vice President of Legislative Affairs Brad Thaler wrote to the Senate Banking Committee.

“We all know that the economic impact of COVID-19 and the credit needs of small businesses will be with us beyond the short-term bridge provided by the PPP,” he wrote. He asked Congress to exclude member business loans made in response to the coronavirus crisis from the credit union Member Business Loan cap.

Meanwhile, financial trade groups, including CUNA and NAFCU, have warned Congress that the “American Rescue Plan of 2021,” the latest stimulus bill, does not include language to protect individuals’ economic impact payments from garnishment. The last stimulus bill included such language, the groups, which includes consumer advocates, said in their letter.

“While depository institutions and even many debt collectors and buyers believe that economic impact payments should be exempt from garnishment orders, depository institutions are obligated to comply with court orders, and unless Congress includes the attached language, they will be forced to pay some creditors who attempt to garnish and freeze bank accounts,” they wrote.