February 24, 2021
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Vendor * Spotlight
CFT
PPP reforms target smallest businesses
 
The Biden administration announced several Paycheck Protection Program reforms to target the program to the smallest businesses. The updates include:

A 14-day period during which only businesses with fewer than 20 employees can apply for PPP relief. Applications already in the pipeline or requiring error resolution will continue to be processed during this period.
 
Revising the loan calculation formula for sole proprietors, independent contractors, and self-employed individuals to use gross income instead of net income. Further, $1 billion will be set aside for PPP loans to businesses in this category that do not have employees and that are located in low- or moderate-income areas.
 
Eliminating qualifying restrictions for small-business owners delinquent on their federal student loans or with prior non-fraud felony convictions.

Ensuring access for non-citizen small-business owners who are lawful U.S. residents by clarifying that they may use Individual Taxpayer Identification Numbers to apply for relief.
 
The administration also said, it has revised the PPP loan applications to encourage self-reporting of demographic data. It will conduct stakeholder outreach on PPP challenges.

The SBA will launch an initiative allowing lenders to submit PPP recommendations and questions and streamlining resolutions.

Additional information and resources are available on the SBA and Treasury PPP pages, ICBA's PPP and EIP News page, ABC's matrix of PPP updates in the stimulus law, and ICBA's summary of the stimulus package's community banking provisions.

 Source: The White House; SBA; Treasury, ICBA; ACB
Lawmakers urge expanded farm partnership access to PPP

A bipartisan group of lawmakers asked the Treasury Department and SBA to clarify that farm partnerships and LLCs are eligible to use gross income in applying maximum Paycheck Protection Program loan calculations.
 
Background: Farmers and ranchers without payroll or positive net income in 2019 were shut out of the original Paycheck Protection Program. Congress changed this limitation to be based on gross income, but SBA guidance has required farm partnership applicants to use net income from their schedule K-1.
 
What's New: In their letter, the members of Congress said they believe the Consolidated Appropriations Act of 2021 provides SBA authority to use gross income to allow farm partnerships to qualify.
 
ICBA Position: ICBA supports using gross income in lieu of net income to show positive income and allow farm partnerships to qualify for the PPP.
Source: ICBA
SBA shortens period for relief payments

The SBA issued new guidance adjusting the number of months of 7(a), 504, and Microloan payments it is making for borrowers under Section 1112 of the CARES Act, as amended by Section 325 of the Economic Aid Act.
 
Procedural Notice 5000-20095 says SBA has determined that the $3.5 billion in funds is insufficient to pay for the six months of payments authorized by the laws. Instead, the guidance includes a plan to proportionally reduce the number of months provided for each category of loans, effective immediately.
Source: SBA
Forbearance, foreclosure protections
extended

The Biden administration extended the foreclosure moratorium and mortgage forbearance on certain loans through the end of June.
 
The extension—which applies to FHA, VA, and USDA Rural Housing loans—also provides up to six months of additional mortgage payment forbearance to borrowers who entered forbearance on or before June 30, 2020.
 
The FHFA last week said Fannie Mae and Freddie Mac will extend until March 31 the moratoriums on single-family foreclosures and real-estate-owned evictions for enterprise-backed mortgages.

Source: The White House; FHFA
Call report threshold relief finalized

Federal regulators issued final call report changes related to asset threshold relief given the impact of Paycheck Protection Program lending on bank balance sheets.
 
Background: The agencies' call report revisions are consistent with their interim final rule issued last fall in response to ICBA's push for relief from regulatory burdens caused by participating in federal coronavirus response programs.
 
What's New: The agencies are expanding eligibility for the FFIEC 051 call report and relief from certain additional data items by allowing community banks to base their total assets on the lesser of their assets as of June 30, 2020, and Dec. 31, 2019.
 
ICBA Position: In a comment letter earlier this month, ICBA thanked the regulators for extending streamlined reporting but urged the agencies to increase the 051 call report threshold from $5 billion to $10 billion in assets, which is not included in the final rule.

Source: FDIC; ICBA
Congress urged to reexamine credit union tax break

The National Taxpayers Union called on Congress to evaluate reforms to the credit union industry as some tax-exempt credit unions have begun to resemble taxpaying financial institutions.
 
The organization urged the Senate Finance and House Ways and Means committees to demand enhanced credit union transparency, examine potential abuses of their tax-exempt purpose, and consider reforms such as revenue-neutral tax adjustments and 990 compliance.
 
ICBA renewed its call for Congress to reexamine the credit union tax subsidy in an open letter to Congress featuring its 2021 policy agenda. It also continues raising awareness of credit union mission creep through its "Wake Up" campaign and Credit Union Task Force.

Source: National Taxpayers Union; ICBA
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Virtual Conference - March 11, 2021

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