ICBA Seeks Clarity on Paycheck Protection Program Loan Forgiveness

Washington, D.C. (May 6, 2020)—The Independent Community Bankers of America® (ICBA) is calling on the Treasury Department and Small Business Administration to provide additional guidance to community banks and their borrowers on the process for obtaining forgiveness of Paycheck Protection Program loans.

"Community banks have worked diligently to help ensure the Paycheck Protection Program is providing credit to small businesses nationwide," ICBA President and CEO Rebeca Romero Rainey said today. "The rules and guidance on Paycheck Protection Program forgiveness must be clear and reliable so small businesses can make informed decisions in using PPP funds. The current lack of clarity is inhibiting critical spending, and only clear and reliable guidance will allow the program to reach its potential."

In a letter to Treasury and the SBA, ICBA called on the agencies to:

• Reconsider the SBA’s non-statutory requirement that 75 percent of PPP loan proceeds must be spent on retaining payroll. ICBA recommends lowering the payroll expense requirement to no more than 50 percent to help small businesses meet other overhead costs.
• Provide a straightforward, easy-to-apply approach to loan forgiveness, such as developing a PPP loan-forgiveness calculator that will allow borrowers and lenders to easily determine the forgiven amount.
• Establish a presumption of compliance for all loans with an original balance of $1 million or less based on the borrower’s certification that the funds were used in accordance with the terms of the program.
• Address the many questions that have arisen related to PPP loan forgiveness, such as the consequences if borrowers spend less than 75 percent of their PPP loans on payroll and what constitutes full-time staff and new hires.

Community banks have been prolific PPP lenders and instrumental in meeting the needs of small businesses during the COVID-19 emergency. ICBA will continue working with Treasury and the SBA to address their questions and concerns related to the program's forgiveness phase.

About ICBA

The Independent Community Bankers of America® creates and promotes an environment where community banks flourish. With more than 50,000 locations nationwide, community banks constitute 99 percent of all banks, employ nearly 750,000 Americans and are the only physical banking presence in one in three U.S. counties. Holding more than $5 trillion in assets, nearly $4 trillion in deposits, and more than $3.4 trillion in loans to consumers, small businesses and the agricultural community, community banks channel local deposits into the Main Streets and neighborhoods they serve, spurring job creation, fostering innovation and fueling their customers’ dreams in communities throughout America. For more information, visit ICBA’s website at www.icba.org. 

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