ICBA expressed concerns with this week's Treasury Department guidelines for the Small Business Administration's Paycheck Protection Program and called on the agencies to update the guidelines before the program goes live.
In a letter to the agencies, ICBA said the guidelines do not empower all community banks to participate and meet the small-business demand. ICBA raised concerns that:
- The 0.5 percent interest rate is below break-even for community banks. Congress allowed up to 4 percent.
- The two-year loan terms are unreasonably short and will hamper borrowers. Congress allowed up to 10-year terms.
- Guidelines on the use of loan proceeds are excessively restrictive.
- The lack of detailed guidance shifts too much liability to the lender.
- Treasury and the Federal Reserve should create a liquidity facility for community banks doing PPP loans.
"I urge you to amend the guidance so that community banks will be able to use it to help their small business partners and communities," ICBA President and CEO Rebeca Romero Rainey wrote.
Treasury this week released initial information and resources on the $350 billion program established by the Coronavirus Aid, Relief, and Economic Security Act. The Treasury resources and additional information are available on ICBA's Crisis Response and Preparedness Toolkit.