Credit Union CEO Wants More PPP Information From SBA

A credit union CEO told U.S. House members Tuesday that the Small Business Administration needs to provide more information more frequently about the Paycheck Protection Program as it winds down, and the federal government needs to be thinking of next steps to help small businesses recover from pandemic shutdowns.

Aissatou Barry-Fall, president/CEO of Lower East Side People’s Federal Credit Union in New York ($86 million in assets, 8,317 members) told members of a House subcommittee that her credit union and others that are also Community Development Financial Institutions (CDFIs) are working hard to process loans before the May 31 deadline for submission.

The SBA has another month to process those loans for approval before the expiration of a program launched in April 2020 to help businesses survive the economic shutdowns and disruptions that occurred after COVID-19 was declared a pandemic March 11, 2020. As of May 17, the program has distributed more than $788.1 billion through 11.8 million PPP loans, most of them expected to be forgiven.

“In the past two weeks, there has been confusion about how much PPP funds are available and whether the remaining funds will be available through the deadline,” Barry-Fall said.

“We have had to pull back on accepting new applications until we can make sure the businesses we are working with have made it through the approvals,” she said. “SBA itself has reached out to urge us to continue accepting applications, but the delays in the approval process and our own capacity limitations prevent us from doing so.”

Lower East Side People’s remained on the sidelines in the first round of PPP loans from April 3 to April 14, 2020, when the $349 billion fund was exhausted. After overcoming logistical challenges to get onto the SBA platform, it jumped in for the second round of $320 billion that ran April 27 to Aug. 8.

The credit union’s $59 million loan portfolio includes about $16 million in PPP loans, most of them originated in the third round that began in January with $284 billion in funds.

“We now have a strong pipeline that we hope to continue processing, as long as the $9 billion set aside [for CDFIs] is available,” she said.

Most of its business borrowers are small entrepreneurs. Its average PPP loan is about $30,000, compared with a U.S. average of $101,554 for loans made last year and $43,975 for loans made this year.

Its largest PPP loan was for $750,000 and the smallest one for $220.

“The amount of work is the same, but we did not turn anyone away,” she said.

Barry-Fall testified at an online hearing by the House Small Business Subcommittee on Economic Growth, Tax, and Capital Access. She testified as a member of Inclusiv, a New York-based group that represents about 400 credit unions with some combination of CDFI, MDI (Minority Depository Institution) or low-income designation.

“Our role is to serve everyone in the community, particularly those businesses that other lenders cannot or will not serve. These are the minority businesses that would have been left behind were not by the work of CDFIs and MDIs.”

Barry-Fall also asked the SBA to:

• Provide more information on applications with delays or holds on approvals to help us know whether the hold is due to a challenge with a particular borrower or whether there is an overall system issue.
• Review businesses on hold for PPP loans due to their use of Individual Taxpayer Identification Numbers, which are commonly used by immigrants who lack Social Security numbers. “There are still many ITIN borrowers that have been on hold for weeks and even months without knowing why,” she said.
• Open the SBA Community Advantage Program to CDFI credit unions. The program, now restricted 501c3 non-profit lenders, provides guarantees between 75% to 85% for small businesses for loans up to $250,000. The guarantees are targeted to underserved communities and thus are more flexible than traditional SBA guarantee programs.

Last year, $522.2 billion was distributed through 5.1 million PPP loans. Under this year’s program, $265.9 billion had been approved as of May 17 for six million PPP loans.

In April, the SBA reported that 841 credit unions with assets under $10 billion have made 130,743 PPP loans this year, totaling almost $4.7 billion. The agency said that eight credit unions with assets of more than $10 billion have made 13,580 loans, totaling $412 million.