April 28, 2020

SBA: More Than 475,000 PPP Loans Made As Of Tuesday Afternoon

As of 1 p.m. today, the Small Business Administration said it had approved more than 475,000 loan applications submitted by more than 5,100 lenders for a total of more than $52 billion. The average loan size in the second round of funding that opened yesterday morning is $111,000, the SBA reported, down from $207,000 in the first round. The majority of loans — 85% — made since Monday have been for amounts of $150,000 or less. Roughly seven in 10 second-round loans were made by lenders with less than $10 billion in assets, amounting to nearly $30 billion.

Mnuchin: SBA To Review PPP Loans Over $2 Million

The Small Business Administration will conduct a “full audit” of Paycheck Protection Program loans made in amounts over $2 million to ensure the borrower’s legitimate economic need before they can be forgiven, Treasury Secretary Steven Mnuchin told CNBC today. In an interview on Squawk Box this morning, Mnuchin emphasized that the onus is on the borrower to certify their economic need when seeking a PPP loan.

“It’s the borrowers who have criminal liability if they made this certification and it’s not true,” Mnuchin confirmed, responding to recent reports of large firms, including professional sports franchises, who have sought and received PPP funding. Mnuchin added that the PPP “was a program designed for small businesses, it was not a program designed for public companies that had liquidity. The certification was very clear in saying that if people had other sources of liquidity, they could not take this loan.”

Mnuchin added that of the PPP loans made so far, approximately one million have gone to companies with fewer than 10 employees. He also said that he was “highly encouraged” to see the average loan size falling, noting that the average loan size in the backlog of loans waiting to be processed is less than $100,000. 

“We’re going to do what we need to do to make sure everybody is treated fairly in this program,” he said.

Updated MBA Document Offers Equipment Resources For Employee, Customer Safety

As businesses prepare to reopen across the state, there are many factors to consider when determining when and how to begin “re-opening” your bank to the public. So many moving parts will mean this process will look different from county to county and, in some cases, city to city. MBA has developed a document (requires MBA password) with various questions and resources that bankers should use in their discussions with their leadership about how to best approach this challenge while keeping employees and customers safe. It also lists companies supplying coronavirus-related products.

MBA VEBA Highlights Mental Health Resources

As the banking community navigates the financial aspects and cumbersome bureaucracy surrounding COVID-19, the financial environment created by COVID-19 is not the only problem facing us. The COVID-19 outbreak is taking a heavy toll on the emotional health of employees and their families, too.   

A recent report from the Kaiser Family Foundation finds 50% of Americans are concerned about mental health issues associated with the COVID-19 pandemic. The same report showed 45% of Americans feel that worry and stress related to the pandemic are hurting their mental health. 

For these reasons, the MBA VEBA Insurance Team is highlighting the array of mental health benefits available to all our member bank employees. All members participating in VEBA’s medical plans have access to Interactive Health and Teladoc Behavioral Health. In addition, banks participating in the long-term disability plan also have access to Unum's Employee Assistance Program. This is an added benefit falling within the parameters of the VEBA LTD coverage.

This flyer details access points, websites and brief descriptions of benefits for MBA VEBA members. The MBA VEBA Team encourages all to visit these resources to view what is available. If there are questions, please call us at 800-234-4939.

CFPB Asks FCC To Facilitate COVID-19-Related Calls

The Consumer Financial Protection Bureau wrote to the Federal Communications Commission in support of a petition filed by the American Bankers Association and six other financial trade groups seeking an expedited ruling from the FCC on the exempt status of banks’ COVID-19 related calls. The CFPB called on FCC to exempt forbearance and certain other calls related to the pandemic from the Telephone Consumer Protection Act restrictions.

Specifically, CFPB supported allowing a limited number of financial institutions’ automated COVID-19-related calls to offer forbearance, payment deferrals, fee waivers, extension or relaxation of repayment terms, or loan modifications on loans secured by homes or vehicles. 
“Allowing financial institutions to make automated calls is one more way to maximize the outreach to ensure consumers receive important and timely information,” said CFPB Director Kathleen Kraninger.

Article Focuses On Role Of CRA In Coronavirus Recovery

An article in the latest issue of ABA Bank Compliance focuses on the financial industry’s response to the coronavirus pandemic and the role that the Community Reinvestment Act can play as banks work to help their local economies recover.

While the agencies issued guidance in late March noting that favorable CRA consideration would be given for bank efforts to work with communities affected by the pandemic, it “leaves a wide berth for interpretation by bankers.” The article discusses more immediate ways banks can respond from a CRA perspective, including working with borrowers to address immediate needs for funding, as well as what they can be thinking about in the longer term, such as the need for financial education.

CLA Addresses Accounting Considerations For Financial Institutions Funding PPP Loans

MBA has received numerous questions from banks about how to handle the accounting of PPP loan fees. CLA, an MBA associate member, has put together an article that explains many of the accounting issues. This article addresses issues such as deferred fees, guarantees and loan forgiveness. For more information, contact Scott Lively at 314-497-1738 or Scott Klitsch.

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