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CUNA and NAFCU joined 40 members of the House of Representatives to support a request for the Small Business Administration (SBA) to review its Paycheck Protection Program (PPP) "Good Faith Error" rule in an effort to potentially forgive excess loan amounts that were sent out or make statutory changes to the rule.
In response to the pandemic, Congress established the SBA's paycheck program under the CARES Act and the Economic Aid Act in which credit unions, banks and other private lenders distributed nearly $800 billion in guaranteed and forgivable loans to small businesses. According to estimates from the SBA, there were more than 304,000 PPP loans sent out during the pandemic with excess loan amount errors totaling more than $3.7 billion – and the SBA wants that money back.
Forty members of the House of Representatives sent a letter to the SBA on Thursday to either forgive those mistakes or make changes to its "Good Faith Error" rule, citing that small business owners "are the least likely to have access to attorneys or accountants" to know that the SBA made a mistake with its PPP loan calculations.
Led by House Small Business Committee Member Rep. Chrissy Houlahan (D-Pa.), Rep. Judy Chu (D-Calif.) and Committee Chairwoman Nydia M. Velázquez (D-N.Y), the letter stated, "The loans were intended to assist small businesses with meeting payroll costs and other expenses, and full loan forgiveness was offered if loan proceeds were spent on such purposes. Importantly, loan amounts were based on employee headcounts and were subject to various complex and rapidly changing rules, especially at the outset of the program."
The leaders of NAFCU and CUNA applauded the efforts by lawmakers trying to help small business owners to get the "Good Faith Error" rule changed.
"NAFCU thanks Representative Houlahan and the other signers of the letter for their leadership in urging the SBA to revisit the 'Good Faith Error' rule and their ability to provide relief," NAFCU President/CEO Dan Berger said. "As America's small businesses, and the small financial institutions like credit unions that support them, continue to recover from the pandemic, they deserve a fair opportunity for equitable economic recovery originally promised by the SBA under the Paycheck Protection Program, and not punishment for unintended errors."
In a statement, CUNA President/CEO Jim Nussle said, "Credit unions of all sizes were proud to offer more than 170,000 PPP loans to help keep businesses afloat during an unprecedented pandemic. Credit unions rose to meet the challenge, despite confusing and ever-changing rules and guidance, because their communities needed them to. The 'Good Faith Error' rule would help forgive these loans for businesses that were doing their best to stay open during unpredictable times and it has our full support."
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Michael Ogden
Editor-in-Chief at CU Times. To connect, email at [email protected]. As Editor-in-Chief of CU Times since 2016, Michael Ogden has led the editorial team in all aspects of content strategy and execution, including the creation of the publication’s exclusive and proprietary research database of the credit union industry’s economic landscape. Under Michael’s leadership, CU Times has successfully shifted to an all-digital editorial product with new focuses on the payments, fraud, lending and regulatory beats. Most recently, he introduced a data-focused editorial product for subscribers that breaks down credit union issues into hard data, allowing for a deeper and more factual narrative for readers. In 2024, he launched the "Shared Accounts With CU Times" podcast, which offers a fresh, inside-the-newsroom perspective through interviews with leaders from the credit union industry and the regulatory world. He dives into pressing credit union issues, while revealing the personalities working behind-the-scenes to push the credit union world forward. His background includes years as a radio and TV anchor/reporter and a public relations and digital/social media manager, where he covered the food and music industries, as well as cooperatives and credit unions. Over the years, he has launched numerous exclusive video and podcast series, including a successful series of interactive backstage interviews with musicians at music festivals, showcasing his social media and live streaming production skills.
