On Wednesday, two credit union officials will testify before the House Committee on Small Business during a hearing called "What Comes Next? PPP Forgiveness," including Tracy Ward, director of the SBA 504 Loan Program of the Self-Help Ventures Fund, a sister agency to Self-Help Federal Credit Union of Durham, N.C. ($1.7 billion in assets, 89,525 members).

Self-Help FCU was the third-largest credit union originator of PPP loans, based on SBA records through May 10. It originated 2,616 PPP loans worth $244.3 million, which supported 26,172 jobs from April 2020 to early May 10. As of June 30, it still held 1,862 PPP loans worth $143 million, down from 2,036 loans worth $187 million on March 31.

One new wrinkle in the program is the SBA's introduction early this month of a process that allows businesses to apply for forgiveness directly through an SBA online portal for loans under $150,000, rather than through their lender.

Ward said the SBA's new Direct Forgiveness Portal is a great option for borrowers if their lenders don't have an online system in place, or if their lenders are failing to serve them in other ways.

However, Self-Help FCU and many other credit unions have already invested cash and hundreds of hours setting up systems to make the forgiveness process simple and painless for borrowers.

Tracy Ward

"By working directly with our borrowers as they enter their forgiveness information, we try to help them avoid errors that would prevent them from obtaining the maximum forgiveness amount they are eligible to receive," Ward said. "The SBA's new Direct Forgiveness Portal is a good step, but should not be the only method of allowing borrowers to apply for forgiveness. After a program full of constant changes, we worry it would add even more confusion to tell borrowers they have to submit their forgiveness applications a new way now."

Kaley Schafer, NAFCU's senior regulatory affairs counsel, said credit unions have to opt in to offer direct forgiveness to borrowers, and she said NAFCU wants the SBA to maintain that flexibility.

In a three-page letter to the committee, Schafer wrote that the SBA should provide clear guidance to lenders and borrowers that choose to use the direct forgiveness tool. However, she said adding another option will create complication for credit unions that have systems already in place.

Kaley Schafer

"Although the process streamlines the borrower's experience, it does not necessarily streamline the process for all lenders as many will have to monitor the SBA's system and update their commercial lending platforms," Schafer wrote.

She said as of as of July 31, roughly 44% of all PPP loans have a submitted forgiveness application.

"Amending the forgiveness process at this time will likely create some confusion and borrowers have come to rely on their credit unions to assist them through every phase of the PPP process, including forgiveness," she wrote. "With roughly half of all PPP loans outstanding, lenders need guidance at the outset to ensure a quick and seamless transition to using the Direct Forgiveness Process, should they choose to opt-in."

Ward will be testifying during the online hearing on behalf of Self-Help FCU and the Center for Responsible Lending, which Self-Help FCU founded in 2002.

Also testifying Wednesday will be Leslie Payne, assistant vice president of commercial lending at Affinity Federal Credit Union of Basking Ridge, N.J., 22 miles west of Newark.

Affinity ($3.6 billion in assets, 189,871 members) originated 1,631 PPP loans worth $91.6 million, which supported 9,619 jobs from April 2020 to May 10. It still held 671 PPP loans worth $39.2 million as of June 30, down from 1,118 loans worth $62.1 million on March 31.

The PPP's first iterations ran from April to August 2020. It was revived in December and continued taking applications until the end of May, if they were coming from Community Development Financial Institutions (CDFIs).

A CU Times analysis of loan-level data from the SBA through May 10 found 965 credit unions participated in the program, originating $15.1 billion from 361,980 PPP loans to help support 199,598 jobs. A list of the top 15 credit union lenders and a map of the geographic distribution of credit union loans can be found here.

The analysis found credit unions accounted for only about 2% of the value of PPP loans, but they tended to serve smaller businesses that were often turned away by big banks. The average PPP loan through credit unions was $41,687, compared with $70,436 for all lenders.

"Throughout the PPP program, credit unions have consistently provided smaller dollar PPP loans to small businesses," Schafer wrote.