Credit unions are not eligible for loans under the Small Business Administration Paycheque Protection ProgramNCUA President Rodney Hood said in a letter to credit unions on Tuesday.
Hood said that under SBA rules, “financial firms primarily engaged in lending activity” are not eligible for the program.
Credit union groups had expressed the hope that there would be sufficient flexibility in the program to make them eligible to receive, as well as to disperse loans.
President Trump discussed his desire to quickly pump out an additional $ 250 million during a video conference with bankers on Tuesday. This meeting did not include credit unions – the second time recently that credit union officials were not included in banker meeting with Trump.
Democratic leaders in Congress said on Wednesday they wanted $ 125 million of that money to be provided by community financial institutions, which, in turn, would provide loans to small businesses.
They also want $ 100 billion for hospitals and other health facilities, $ 150 billion for state and local governments and a 15% increase in spending on food stamps.
In the letter, Hood assured credit unions that loans made under the program would not count towards the limit on loans to businesses that are members of a credit union, as the loans are 100% guaranteed by the federal government.
“It was never in doubt, but we appreciate the NCUA’s statement,” said Ryan Donovan, CUNA Advocacy Officer.
Hood also said that lenders would be exempt from liability if a borrower failed to meet the program’s criteria.
Credit union groups had asked the federal government for assurances that they would not be responsible for loans in the event a borrower falsified loan documents.
“It’s definitely positive,” said Carrie Hunt, senior vice president of government relations and general counsel for NAFCU.
She said credit unions and federal officials want small businesses to get loans as quickly as possible.
“Everyone wants to do it very quickly,” she said. “People need this money now.”
Asked about the absence of credit unions during Trump’s meeting with the bankers, Hunt said, “I certainly don’t think credit unions are being forgotten.”
She added, “But do we think the administration needs to hear directly from the credit unions? Absolutely.”
Donovan said CUNA is in constant contact with the administration.
“CUNA is in contact with the administration several times a day and we try to help credit unions to implement the PPP and to serve their members,” he said. “We appreciate the administration’s support for additional PPP funding.”