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SBA releases PPP borrower information
On July 6, the Small Business Administration (SBA), in conjunction with the Treasury Department, released the business information of certain Paycheck Protection Program (PPP) loan recipients. For any loan over $150,000, the SBA data release includes business names, addresses, NAICS codes, zip codes, business type, demographic data, non-profit information, name of lender, jobs supported, and a loan amount range. For loans under $150,000, the SBA withheld the business names and addresses in the release. The data release also includes overall statistics regarding dollars lent per state, loan amounts, top lenders, and distribution by industry. According to data, the PPP has approved over $4.8 million loans, with the average loan size of approximately $106,000. Currently, there are 5,460 participating lenders.
PPP extended until August 8
On July 4, President Trump signed S.4116, which extends authorization for the Small Business Administration’s Paycheck Protection Program (PPP) through August 8. Additionally, the measure separates the amount authorized for the SBA’s standard 7(a) small business lending program from the PPP’s authorized commitment of $659 billion.
CFPB releases spring 2020 rulemaking agenda
On June 30, the CFPB released its spring 2020 rulemaking agenda. According to a Bureau announcement, the information details the regulatory matters that the Bureau “expect[s] to focus on” between May 1, 2020 and April 30, 2021. The announcement notes that the agenda was set before the Covid-19 pandemic struck and while the Bureau “continues to move forward with other regulatory work,” it will prioritize work related to supporting consumers and the financial sector during and after the Covid-19 pandemic.
In addition to the rulemaking activities already completed by the Bureau in May and June of this year, the agenda highlights other regulatory activities planned, including:
- Escrow Rulemaking. The Bureau intends to issue a proposed rule to implement Section 108 of the Economic Growth, Regulatory Relief, and Consumer Protection Act of 2018, which directs the Bureau to exempt certain loans made by creditors with assets of $10 billion or less (and that meet other criteria) from the escrow requirements applicable to higher-priced mortgage loans.
- Small Business Rulemaking. The Bureau states that in September 2020, it will publicly release materials for an October panel (convening under the Small Business Regulatory Enforcement Fairness Act) with small entities likely to be directly affected by the Bureau’s rule to implement Section 1071 of Dodd-Frank.
- HMDA. The Bureau states that two rulemakings are planned, including (i) a proposed rule that follows up on a May 2019 advanced notice of proposed rulemaking which sought information on the costs and benefits of reporting certain data points under HMDA and coverage of certain business or commercial purpose loans (covered by InfoBytes here); and (ii) a proposed rule addressing the public disclosure of HMDA data.
- Debt Collection. The Bureau intends to release the final rule amending Regulation F to implement the Fair Debt Collection Practices Act in October 2020 (InfoBytes coverage of the May 2019 proposed rule here). Additionally, “at a later date” the Bureau intends to finalize the February supplemental proposal, which covers time-barred debt disclosures (covered by a Buckley Special Alert here).
- Qualified Mortgages (QM). The Bureau states it is considering issuing a proposed rule “later this year” that would create a new “seasoning” definition of a QM under Regulation Z, allowing for QM status after the borrower has made consistent timely payments for a defined period.
Additionally, in its announcement, the Bureau notes that it is (i) participating in an interagency rulemaking process on quality control standards for automated valuation models (AVMs) with regard to appraisals; and (ii) continuing to review and conduct the five-year lookback assessments under Section 1022(d) of Dodd-Frank.
Small business owners previously excluded from PPP granted application extension
On June 29, the U.S. District Court for the District of Maryland issued a memorandum to address two similar suits, which will provide several small business owners with criminal records three additional weeks to apply for loans through the Paycheck Protection Program (PPP). The court ruled that previous versions of the Small Business Administration’s (SBA) rule that excluded felony convictions of applicants or owners of applicants were “arbitrary and capricious” because the rules contained no explanation for the criminal history exclusion. The ruling extends the PPP application deadline for the business owners to July 21 following the SBA’s issuance of an interim final rule (IFR)—effective June 24 (covered by InfoBytes here)—that, according to the court, “provides a reasoned explanation for a more limited criminal history exclusion.” The court rejected the SBA’s argument that the case is now moot, stating that even though the business owners are now eligible to apply for PPP loans, they “still face difficulties in applying at the last minute either because banks are no longer accepting applications or because banks are still using old forms with the prior criminal history exclusion. Therefore, the plaintiffs continue to face ongoing harm because of the allegedly unlawful prior iterations of the rule.”
However, the court disagreed with one of the business owner’s claim that the criminal history exclusion violates the CARES Act, finding that the SBA is within its rights to consider borrowers’ ability to repay PPP loans. “While the court agrees that the PPP functions differently than the SBA’s other loan programs, it is not unreasonable to consider ability to repay, because if the loans are not used for specified purposes, then they are not forgivable,” the court wrote. The court also declined to extend the PPP application deadline to all newly eligible individuals who were previously excluded, stating that “past harm cannot justify an injunction extending the application deadline,” since it is unclear “what harm to [the business] resulting from prior iterations of the criminal history exclusion will continue past June 30.”
SBA again revises PPP rules on felony convictions
On June 26, the SBA made effective an interim final rule, which revises, for the second time, the eligibility requirements for the Paycheck Protection Program (PPP) related to felony convictions of applicants or owners of applicants. As previously covered by InfoBytes, on June 12, the SBA reduced the look-back period from five years to one year for any felony conviction that does not involve fraud, bribery, embezzlement, or a false statement in a loan application or an application for federal financial assistance of any owner of 20 percent or more of the equity in the applicant. The new interim final rule specifies two additional modifications that would render an applicant ineligible for a PPP loan: (i) if a 20 percent owner is presently subject to pending criminal charges for felony offenses (as opposed to any formal criminal charges); and (ii) if a 20 percent owner is on probation or parole that commenced within the one- or five-year time frames, as applicable, for the convictions outlined above.
SBA updates PPP FAQs
On June 25, the Small Business Administration (SBA) updated the Paycheck Protection Program (PPP) FAQs to include new details about the maturity dates of the PPP loans. Specifically, the FAQs note that if a PPP loan received an SBA loan number on or after June 5, the loan has a five-year maturity. Any loan that received an SBA loan number prior to June 5 has a two-year maturity, unless the borrower and lender agree to extend the term to five years. Additionally, the SBA updated two additional questions to reflect changes made by the Paycheck Protection Program Flexibility Act of 2020 (the Flexibility Act), previously covered by InfoBytes here. First, the Flexibility Act extended the covered period for loan forgiveness from eight weeks after the date of loan disbursement to 24 weeks. The FAQs note that the 24-week period applies to all borrowers, but any borrower that received an SBA loan number prior to June 5, may still use the eight-week period. Finally, the FAQs now reflect the new felony conviction standards of PPP eligibility. On June 12, the SBA reduced the look-back period from five years to one year for any felony conviction that does not involve fraud, bribery, embezzlement, or a false statement in a loan application or an application for federal financial assistance of any owner of 20 percent or more of the equity in the applicant (covered by InfoBytes here).
FTC and SBA warn companies about misleading SBA loan marketing
On June 24, the FTC and the Small Business Administration (SBA) sent warning letters to six companies that they may be misleading small businesses seeking SBA loans due to the Covid-19 pandemic. The press release highlights specific claims from each company that the letters assert “could lead consumers to believe the companies are affiliated with the SBA,” or that consumers could use their websites to apply for loans from the Paycheck Protection Program (PPP) or other programs authorized by the CARES Act. These cited claims include, among others, (i) offering “'COVID-19 SBA Loan Programs”; (ii) offering “SBA Lending experts” and “SBA Loan Officers”; and (iii) stating “Get matched with a PPP lender now!” The letters warn the recipients to remove all deceptive claims and advertisements and remediate any harm to small business consumers that may have been caused. The letters further instruct the companies to notify the FTC within 48 hours of the actions they take in response. Copies of all six warning letters are available via links in the press release.
FDIC and OCC mitigate Covid-19 assessment effects
On June 22, the FDIC and the OCC released separate rules aimed at mitigating the assessment effects of participation in Covid-19 programs. Specifically, the FDIC issued a final rule to limit the deposit insurance effects of participation in the Paycheck Protection Program (PPP), the Paycheck Protection Program Liquidity Facility (PPPLF), and Money Market Mutual Fund Liquidity Facility (MMLF). Among other things, the final rule (i) removes the effect of PPP lending and borrowings under the PPPLF in calculating risk measures for an insured depository institution’s assessment rate; (ii) provides an offset to the total assessment amount for the increase in assessment base due to participation in the PPP and MMLF; and (iii) removes the effect of PPP and MMLF participation when classifying institutions as small, large, or highly complex for assessment purposes. The final rule is applicable as of April 1.
Under the OCC’s interim final rule (see also Bulletin 2020-63), the assessments due on September 30 for covered banks will be based on the December 31, 2019 Call Report for each institution, rather than the June 30 Call Report, in order to lower the assessments for supervised banks. However, if an institution’s June 30 Call Report is lower than the December 31, 2019 report, the OCC will use the lower of the two options. The interim final rule expires after the September 30 assessment collection.
SBA will release names of most PPP borrowers
On June 19, the Small Business Administration (SBA), in conjunction with the Treasury Department, announced that it will release the business information of certain Paycheck Protection Program (PPP) loan recipients. The SBA responded to bipartisan requests from the leaders of the U.S. Senate Small Business Committee and agreed to release the business names, addresses, NAICS codes, zip codes, business type, demographic data, non-profit information, jobs supported, and the loan amounts in general ranges for borrowers receiving loans between $150,000 and the maximum of $10 million. The SBA notes this accounts for nearly 75 percent of the program’s loans. For loans under $150,000, the SBA will release more generalized information about the recipients.
SBA’s Lender Match connects small businesses to small asset lenders
On June 19, the Small Business Administration (SBA) released a dedicated online tool that will match small businesses and non-profits impacted by the Covid-19 pandemic with Community Development Financial Institutions (CDFIs), Minority Depository Institutions, Certified Development Companies, Farm Credit System lenders, Microlenders, and traditional smaller-asset size lenders participating in the Paycheck Protection Program (PPP). Lender Match, which was paused due to CARES Act implementation priorities and loan volume, is being reinstated as an additional resource for small businesses that have not applied for or received approval for a PPP loan. Leads will only be forwarded to CDFIs and lenders with less than $10 billion in assets until the PPP program ends on June 30, 2020, at which point Lender Match will open to all participating SBA lenders. Applicants that are matched with lenders through the tool will receive an email within in two business days, which will allow them to immediately begin the application process for PPP loans and other SBA lending products. SBA notes, however, that Economic Injury Disaster Loan (EIDL) applications will not be accepted through Lender Match. Qualified small businesses and agricultural businesses must apply for EIDLs through a recently reopened portal (covered by InfoBytes here).