April 13, 2020

SBA, Treasury Clarify Beneficial Ownership Requirements For PPP Loans

The Small Business Administration and Treasury Department provided guidance today clarifying lenders’ obligations to collect beneficial ownership data when making Payment Protection Program loans. 

As previously stated, depository institutions making PPP loans to existing customers do not need to re-verify beneficial ownership information if it has already been verified, or to collect and verify data if they have not already done so, unless otherwise indicated by the lender’s risk-based Bank Secrecy Act compliance approach.

In an update to their FAQ document on the PPP, SBA and Treasury clarified that lenders making PPP loans to new customers may satisfy beneficial ownership requirements by collecting the name, title, ownership percentage, taxpayer ID number, address and date of birth for natural persons owning at least 20% of a PPP applicant. For legal entity owners of at least 20% of a PPP loan applicant, the lender should collect “appropriate beneficial ownership information for that entity.”

Newly issued FAQs also address nonbank lender eligibility, as well as the applicability of the $10 million loan cap and affiliation rules to franchises, hotel chains and restaurant chains.

Wagner, Lawmakers Call For Flexibility On PPP’s 10-Day Disbursement Rule

Missouri Congresswoman Ann Wagner was among a bipartisan group of lawmakers urging Treasury Secretary Steven Mnuchin and SBA Administrator Jovita Carranza to provide flexibility to lenders regarding the 10-day disbursement window to disburse Paycheck Protection Program funds to borrowers. They noted that banks began issuing loans before the 10-day requirement being finalized.

“Providing this flexibility will help lending and compliance departments fulfill the needs of their already approved PPP borrowers while preserving access to PPP applications for businesses in their community who may still apply,” the lawmakers wrote. “It will also preserve the intent of the CARES Act to expeditiously distribute money to small businesses quickly and preserve eligibility for loan forgiveness for certain expenses by the small businesses.”

Treasury, IRS: Economic Impact Payments Moving This Week

As required by the CARES Act, the Treasury Department and the IRS are beginning to issue economic impact payments to Americans; many ACH transactions were initiated as early as Friday. To help facilitate the timely disbursement of these payments, they have launched a new web tool for individuals who do not normally file a tax return to input their payment information. The tool is designed for those who did not file a tax return for 2018 or 2019 and who do not receive Social Security retirement or disability benefits or Railroad Retirement benefits.
The tool also can be used by lower-income wage earners who have not filed a tax return because they are under the normal income limits for filing; veteran benefit beneficiaries and Supplemental Security Income recipients; and Social Security, Social Security Disability Insurance and Railroad Retirement beneficiaries with qualifying dependents. The IRS noted that individuals who have been claimed by someone else as a dependent on a tax return will not be eligible to receive payments.
The IRS said it also plans to launch a second online tool by April 17 that will enable consumers to check the status of their payment, including the date their payment is scheduled to be deposited in their bank account or mailed to them. The Get My Payment Tool also will provide an option for consumers to provide their bank account information so they can receive payments quickly.

Meanwhile, the Consumer Financial Protection Bureau also published a set of frequently asked questions on economic impact payments, which address, among other things, how much individuals can expect to receive and when they can expect to receive their payment.

ABA Offers Suite Of Communications Resources On Economic Impact Payments

Since the CARES Act was passed, the American Bankers Association has urged the IRS and Treasury to maximize the use of electronic disbursement methods when issuing economic impact payments rather than issuing paper checks to get payments to consumers faster and reduce the risk of fraud.
The association also has created several new resources for banks to help educate their customers about their economic impact payments. These resources include a series of commonly asked questions and consumer tips for avoiding fraud scams related to the economic impact payments.

ABA Asks FCC To Provide Immediate Relief To Facilitate COVID-19-Related Calls

As banks seek to contact customers with COVID-19-related information, the American Bankers Association asked the Federal Communications Commission to provide immediate relief confirming that financial institutions’ COVID-19-related calls are exempt from the Telephone Consumer Protection Act’s requirements. The request comes after the FCC provided 45 days for parties to submit comments on a joint petition filed March 30 by ABA and six financial trade groups requesting an expedited declaratory ruling or waiver confirming the exempt status of these calls.

“Under the existing comment deadlines, reply comments may be submitted up to May 21 — nearly six weeks from today,” ABA said. “Financial institutions seek to place COVID-19-related informational calls to their customers now, not in six (or more) weeks.” ABA noted that a wide range of industry stakeholders agree that the FCC should act on the petition without delay.

CFPB Provides Remittance Rule Relief Through 2020

As part of its policy response to the coronavirus pandemic, the Consumer Financial Protection Bureau said it would provide relief to depository institutions after the scheduled July 20 expiration of a key exception in its remittance rule. The bureau said its goal was to minimize disruptions in consumers’ ability to make cross-border remittance transfers, especially amid the economic turbulence individuals are facing.
“For remittances that occur on or after July 21, 2020, and before January 1, 2021, the Bureau does not intend to cite in an examination or initiate an enforcement action in connection with the disclosure of actual third-party fees and exchange rates against any insured institution that will be newly required to disclose actual third-party fees and exchange rates after the temporary exception expires,” the CFPB said.
The bureau said it expects to finalize in May a proposal that would provide two permanent exceptions but because some depository institutions “may have to commence disclosing actual third-party fees and exchange rate information” by July 21 under the rule, this relief will help banks focus on pandemic response now and have more time for compliance. The current exception allows depository institutions to estimate certain fees and exchange rates when making disclosures to their customers, rather than actual fees and rates that may not be feasible to determine.

Ginnie Mae Expands Pass-Through Assistance Program To Prevent Liquidity Shortfalls

Ginnie Mae has released guidance on its previously announced liquidity support program, which issuers can request an advance from Ginnie Mae to address funding shortfalls they may be facing because of the pandemic. These advances will enable issuers to continue making scheduled payments to their investors and avoid disruptions in the mortgage servicing and MBS capital markets as borrower forbearance and loss mitigation programs are implemented nationwide.

Ginnie Mae will advance funds at a fixed interest rate, which will be applied to a given month’s pass-through assistance to all issuers and posted on Ginnie Mae’s website on the second day of each month. This additional support will cover principal and interest and does not extend to taxes and insurance.

USDA Unveils Tool To Help Rural Communities Address The COVID-19 Pandemic

The U.S. Department of Agriculture unveiled a one-stop-shop of federal programs that can be used by rural communities, organizations and individuals affected by the COVID-19 pandemic. The COVID-19 Federal Rural Resource Guide is a first-of-its-kind resource for rural leaders looking for federal funding and partnership opportunities to help address this pandemic.

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