The Senate on Tuesday passed legislation that would earmark $30 billion of new Small Business Administration Paycheck Protection Loans to banks, credit unions and Minority and Community Development Financial Institutions with less than $10 billion in assets.
Another $30 billion would be set aside for financial institutions with assets of between $10 billion and $50 billion.
The funding is included in the latest coronavirus crisis stimulus legislation negotiated between the Trump Administration and congressional leaders. The Senate passed the bill by unanimous consent. The House is expected to vote on the legislation in the measure Thursday. House leaders are expected to ensure that there is a quorum present to ease passage of the bill.
President Trump has indicated he would sign the measure.
The bill would provide $320 billion to refill the coffers of the PPP program, which were drained shortly after Congress enacted it.
“This new money puts a special focus on community banks and credit unions,” Senate Majority Leader Mitch McConnell (R-Ky.) said.
“Republicans asked us to funnel money into a program that wasn’t working as well as it could,” Senate Minority Leader Chuck Schumer (D-N.Y.) said.
He said many small businesses that did not have existing relationships with banks were not able to get loans in the initial round of lending.
“If you didn’t know a banker … you were left out,” he said. “You couldn’t get in.”
Critics have alleged that large financial institutions were able to monopolize the first round of PPP lending and charged that loans were made to the institutions’ preferred customers.
For instance, the Associated Press conducted an analysis of recent regulatory filings and reported Tuesday that at least 75 publicly traded companies, some of which had market values of more than $100 million, received loans that were supposed to go to small businesses.
One watchdog group blasted the Trump Administration’s management of the program.
“Whether it’s mismanagement or malpractice, the Trump administration’s failure to allocate funds properly means thousands of small businesses won’t receive the funding necessary to support their employees,” Kyle Herrig, president of Accountable.US, said. “Meanwhile, a bunch of publicly-traded companies worth hundreds of millions got a cash infusion and are sitting pretty.”
Credit union trade groups applauded the Senate passage of the measure.
“At a time where small businesses across the country are struggling to remain afloat, this important legislation will ensure that hard working men and women across the country will be able to remain financially secure in spite of this pandemic,” CUNA President/CEO Jim Nussle said.
NAFCU President/CEO B. Dan Berger said he was pleased with the legislation.
“With credit unions processing many SBA loan applications for their members, NAFCU appreciates policymakers responding to our advocacy efforts by setting aside a portion of the funds for credit unions and other community lenders as they are heavily engaged in serving main street businesses and underserved communities,” he said. “These funds are crucial and will further allow credit unions to continue their tireless work in helping their local communities during this uncertain economic time.”