Letter to SBA, Treasury encourages clarification of PPP loan forgiveness requirements


New York Credit Union Association President/CEO William J. Mellin, was among the state credit union league leaders and CUNA who sent a letter SBA and the U.S. Treasury Department on Friday seeking clarified guidance on the Paycheck Protection Program’s loan forgiveness requirements.

The letter to Jovita Carranza, administrator of the SBA and Steven Mnuchin, secretary of the Treasury, stated that, although the groups appreciate the SBA and Treasury’s “diligent efforts” to facilitate the PPP created by the CARES Act, the “lynchpin” of the PPP is the loan forgiveness process.

“As the PPP transitions from lending money to small businesses to the loan forgiveness phase, lenders and borrowers are starting to wrestle with the requirements for loan forgiveness,” the letter stated, adding that the recently published application for loan forgiveness is “overly complex for most businesses” and the “complexity” of the forgiveness process presents an even greater challenge for small businesses.

The letter stated that calculating covered expenses is particularly troubling for small businesses and that credit unions are concerned borrowers may rely on them for assistance in checking whether businesses have properly calculated forgiveness amounts.

“Although credit unions are required to review a forgiveness application and supporting documentation to make a forgiveness decision, this review process should not be relied on by borrowers to help complete applications,” the letter stated. “The calculation worksheet provided in the guidance is very helpful, but this is a serious undertaking for any borrower to calculate correctly.

The groups recommended that the SBA and the Treasury revamp the forgiveness application process for loans under $350,000, the threshold of which captures the vast majority of loans and is the amount at which the CARES Act makes the lowest cutoff in determining lender processing fees, according to the letter.

The letter further stated that “the process could be simplified even more or made automatic for the smallest of borrowers requiring nothing more than a good faith certification that the funds were spent on forgivable expenses. This threshold could be set much lower, for example at $50,000.”

The full letter can be accessed by clicking here.

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