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SPECIAL NEWS BULLETIN
COVID-19 NEWS & RESOURCES
June 30, 2020
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Paycheck Protection Program Updates
Bill would establish PPP loan-forgiveness calculator
Reps. Ann Wagner (R-MO) and Wm. Lacy Clay (D-MO)
introduced legislation
to establish a free online calculator to complete Paycheck Protection Program loan-forgiveness forms.
The Calculate Loan Forgiveness Act would implement the ICBA-advocated policy to require the SBA and Treasury Department to establish or certify a free, accurate, and publicly accessible online calculator to help lenders and small businesses.
PPP loans continue climb ahead of deadline
Community bank Paycheck Protection Program loans continued to climb ahead of today's deadline for borrower applications, according to an
SBA summary
of loan approvals through June 27.
Lenders under $10 billion in assets have made some 2.43 million PPP loans worth nearly $229 billion through both rounds of funding. Lenders from $10 billion to $50 billion in assets made more than 730,000 loans worth more than $100 billion. Combined, the two asset classes account for more than 66 percent of approved loans and more than 63 percent of the approved dollar amount.
In Iowa as of 6/27/20, over 57,638 loans have been made, totaling over $5.06 billion.
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Iowa enacts broad-based tax bill; includes PPP loan forgiveness exclusion
On June 29, 2020, Gov. Reynolds signed
House File 2641
, providing a number of amendments to the state’s tax laws including decoupling from the interest expense limitation, modifying treatment of global intangible low-taxed income and excluding loan forgiveness under the federal Paycheck Protection Program.
These amendments as listed in House File 2641 come on the heels of an Iowa Department of Revenue announcement on June 1 that Iowa does not conform to federal tax law changes under the CARES Act for years beginning before Jan. 1, 2020. The section 163(j) changes are applicable for tax years beginning on or after Jan. 1, 2020. However, the PPP loan forgiveness provisions are effective for years beginning on or after Jan. 1, 2019. As significantly, the new law effectively excludes GILTI from Iowa taxable income for corporate income taxpayers. The amended treatment of GILTI income is effective for 2019 and may provide taxpayers with significant savings during the current filing season
House File 2641 provides a number of other changes to the Iowa tax code, including changes to income and sales and use taxes. Taxpayers with questions about recent Iowa tax reform should consult with their tax advisers for more information.
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OCC Highlights Key Risks for Federal Banking System
The Office of the Comptroller of the Currency (OCC) today reported the key issues facing the federal banking system and the effects of the COVID-19 pandemic on the federal banking industry in its Semiannual Risk Perspective for Spring 2020.
Banks entered the national health emergency related to COVID-19 in sound condition but face weak economic conditions resulting from the economic shutdown in response to the pandemic that will stress financial performance in 2020. The OCC reported weak financial performance, and increasing credit, operational, and compliance risks, among the key risk themes in the report.
Highlights from the report include:
- Financial performance will be affected by higher credit losses, overhead expenses, and lower net interest income.
- The onset of the national health emergency created an uncertain credit environment that will test the resiliency of commercial and retail loan portfolios. Credit risk management practices will need to be flexible and proactive to meet the challenges of the current environment.
- Operational risk is heightened as banks amended business processes and engaged third parties to support widespread remote work capabilities, increased technological capacity, and solutions to maintain operations under elevated operational volumes.
- Compliance risk is elevated because of a combination of altered operations, employees working remotely, and several new federal and state programs designed to support consumers such as the CARES Act, Paycheck Protection Program, and a variety of forbearance and deferred payment programs. Among other challenges, these conditions complicate the compliance responsibilities associated with managing high volumes and various programs of consumer and business lending in a weakened economy.
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COVID-19 VIDEO SERIES
FROM CBI MEMBERS:
Jackie Haley and Dickinson Law attorney
Ben Bruner
discuss legal challenges and opportunities community banks are currently facing in the COVID-19 pandemic environment.
(9:03)
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FHFA extends multifamily forbearance
The
Federal Housing Finance Agency said
Fannie Mae and Freddie Mac are allowing mortgage servicers to extend existing forbearance agreements for multifamily property for up to three months. The extension provides up to six months in total forbearance, during which landlords must suspend all evictions for renters unable to pay rent.
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IRS has granted COVID-19 relief regarding safe harbor 401(k) plans
In response to the economic crisis related to the COVID-19 pandemic, the IRS, in
Notice 2020-52
(the Notice), has expanded the ability of employers to reduce or suspend the promised employer matching or other contributions to a safe harbor 401(k) plan. Normally, there are substantial restrictions that limit an employer’s ability to adopt such an amendment in the middle of the plan year. Generally, 401(k) plans have the same plan year as the employer’s tax year, so many plans operate on a calendar year, but a plan year may technically be any 12-month period, and certainly, many plans would have been in the middle of a year when COVID-19 struck.
The Notice expands the ability of an employer to adopt an amendment that:
- Reduces contributions only for its highly compensated employees (HCEs); or
- If it meets certain requirements, reduces or suspends safe harbor contributions for all employees.
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Video offers COVID-19 economic update
The latest Market Watch Weekly News video from ICBA Securities and Vining Sparks spotlights the potential economic impact of the recent acceleration in COVID-19 cases. The video covers recent health-care and economic data and what's ahead this week.
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RESCHEDULED: SBA Quarterly 7(a) Connect Call with Lenders
SBA has announced that the Quarterly 7(a) Connect call for SBA 7a Lenders has been rescheduled from July 7, 2020 to July 14, 2020 at 2 pm CDT.
Click here to register.
After registration you will be sent a personalized access link and instructions on joining the webinar.
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Have any COVID-19 pandemic-related news or resources to share?
CBI attempts to publish as many different viewpoints as possible to provide you with information in the banking industry. CBI does not necessarily endorse or support the opinions given in these third-party news sources.
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