PPP Open For Business – For Some

January 12, 2021 at 9:58 am Leave a comment

You may have seen this press release from the Small Business Administration, announcing that the Paycheck Protection Program was once again open for business, but there’s a good chance that your credit union was unable to process loans. 

The SBA announced that it was providing an exclusive window to community financial institutions. This means that unless your credit union is a CDFI or MDI, an NCUA designation which includes this list of credit unions, it is not eligible to begin processing these loans (for those of you scrolling, you can find the SBAs definition at 15 U.S.C. 636 (a)). The steps taken by the SBA are in part an understandable response to the first PPP rollout. Remember all of those articles about how the big banks and their favorite clients dominated the process? The hope is that smaller institutions, which tend to give more loans to small businesses, will be more willing and able to participate if they’re guaranteed access. Still, it does mean that many credit unions are largely excluded from this first stage of the rollout.

Credit unions with less than $10 billion in assets will have exclusive rights to lending out from a pot of no less than $15 billion that’s been set aside. However, community banks with the same asset size limits are also included in this pot, as well as institutions chartered under the Farm Credit System. The good news to take away from this is that your credit union will not have to wait in line behind big banks with infrastructure set up specifically for this type of process. (Section 1102(b) of the CARES Act (Public Law 116–136)). 

First Virtual State of the State

The Governor gave the first part of – hopefully – his only virtual State of the State address yesterday. We will be looking through his proposals, but right now, it seems like the issue that could have the greatest impact on credit unions is his plan to legalize the sale and distribution of marijuana on the state level.

Entry filed under: COVID-19, Federal Legislation, Mortgage Lending, New York State, Regulatory. Tags: , , , , .

SBA sets the stage for credit unions to take lead on PPP RDC Litigation Trending Against Financial Institutions

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Authored By:

Henry Meier, Esq., Senior Vice President, General Counsel, New York Credit Union Association.

The views Henry expresses are Henry’s alone and do not necessarily reflect the views of the Association. In addition, although Henry strives to give his readers useful and accurate information on a broad range of subjects, many of which involve legal disputes, his views are not a substitute for legal advise from retained counsel.

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