SDBA eNews

July 16, 2020

ABA Calls on Bankers to Support PPP Forgiveness Legislation

The ABA is urging bankers to contact their lawmakers and urge them to support legislation that would significantly streamline the forgiveness process for loans made through the Small Business Administration’s Paycheck Protection Program. 

The PPP Small Business Forgiveness Act, a bipartisan Senate bill, would allow PPP loans of $150,000 or less to be forgiven once the borrower completes a one-page forgiveness attestation. The bill is expected to ease the forgiveness process for approximately 86% of PPP borrowers, in addition to saving an estimated $7 billion and hours of paperwork.

The ABA joined a broad coalition of nearly 150 trade associations and advocacy groups in strong support of the bill. In addition, a group of 51 state bankers associations last Thursday submitted a letter in support of the bill.

“Banks of all sizes will continue to support their business customers and do their part to spur the economic recovery to come,” the associations said. “In order to help our nation’s smallest small businesses, we urge Congress to quickly pass the Paycheck Protection Program Small Business Forgiveness Act to provide necessary relief to millions of small businesses.”

Contact your lawmakers now.

ABA Unveils New Diversity, Equity and Inclusion Webpage

To help banks’ ongoing work to enhance diversity, equity and inclusion within their workforce, ABA has launched a new DEI page on The page includes several new resources, including tips for recruiting and retaining a diverse workforce, as well as new videos geared toward increasing board diversity.

Bankers can also find the latest DEI news and resources, read ABA’s response to the national conversation on racial justice and inequity, access training and events on DEI topics and view examples of what banks of all sizes are doing and saying about diversity, equity and inclusion. View the webpage

FSB to Study Vulnerabilities of Nonbank Financial Sector in COVID-19 Analysis

The Financial Stability Board will undertake a holistic review of the market volatility that followed the initial outbreak of COVID-19 earlier this year, according to a report released today. As part of that review, the FSB said it would “consider the nature of any vulnerabilities in nonbank financial intermediation” as well as the overall resilience of the nonbank financial sector.

“The market turmoil has reinforced the need to better understand the nature of liquidity risks in the global financial system,” the report said. The FSB added that it intends to produce an “interconnectedness map” highlighting linkages between banks and NBFI entities, which is how the FSB refers to shadow banking, and that it will use this map to inform its work regarding nonbanks for 2021 and beyond.

Despite the severe stresses due to the pandemic, the FSB acknowledged that overall, the financial system “entered the crisis more resilient and better placed to sustain financing to the real economy” as a result of changes made since the 2008 financial crisis. “Financial market infrastructures, particularly central counterparties, have functioned well, despite challenging financial and operational conditions,” the FSB found. Read the report 

Fannie, Freddie Announce Disaster Payment Deferral Option

Fannie Mae and Freddie Mac yesterday announced a new disaster payment deferral option for servicers to offer customers. Both issued communications to servicers expanding the existing definition of “eligible disaster” to include a financial hardship (such as a loss or reduction of income or increase in expenses) that affects a borrower’s ability to pay their contractual monthly payment.

In addition, either the property securing the mortgage loan must experience an insured loss; the property securing the mortgage loan must be located in a FEMA-declared disaster area eligible for individual assistance; or the borrower's place of employment must be located in a FEMA-declared disaster area eligible for individual assistance.

The bulletin also provides detailed eligibility requirements and exclusions for this payment deferral option. Servicers will be required to use this option in evaluating eligible borrowers beginning Oct. 1, but Freddie Mac encouraged servicers to begin implementing the changes as soon as possible. Read more from Freddie Mac. Read more from Fannie Mae.

Fed Extends Rule Allowing Directors, Shareholders to Apply for PPP Loans

The Federal Reserve yesterday said it would extend a temporary exemption from Regulation O to allow bank directors and shareholders to receive Paycheck Protection Program loans from their related banks. Reg O generally limits lending activity to bank directors, shareholders, officers and businesses owned by these persons.

The exception—which applies only to PPP loans—will be extended through Aug. 8, the new expiration date for the PPP. The Fed added that any PPP loans extended to bank directors and shareholders must conform to SBA’s recent guidance, which states that the eligible business must follow the same process as any similarly situated customer or account holder and must not receive favoritism from the bank. Read more

Podcast: How Digital Banking Transformation Paid Off in the Pandemic

When COVID-19 accelerated customer movement into mobile and online banking solutions—and triggered consumers to push their funds into bank accounts—banks that had made investments in the digital customer experience were positioned to capitalize. 

On the latest episode of the ABA Banking Journal Podcast, Radius Bank President and CEO Mike Butler discusses the branchless bank’s fintech-forward strategy and how it helped the bank double account openings in the post-pandemic environment, a core part of the bank’s deposit-focused strategy. 

In the wide-ranging conversation, Butler also discusses:

  • Radius Bank’s “banking as a service” partnerships with fintech firms and how it vets potential partners to “create an Amazon-like experience for our clients.”
  • The bank’s pending acquisition by nonbank fintech firm Lending Club and how the deal may rebundle some core banking functions in the combined organization.
  • How fintech firms have prepared for the economic downturn.
  • The persistent value of the traditional banking bundle of lending, payments and insured deposits.

Listen to this episode

GSB to Hold Digital Banking School

Banking continues to evolveand as consumer preferences have moved from lobby to service multi-channel, multi-touch interactions, the demand for digital banking services has grown exponentially. This shiftplus pressure from new and non-traditional competitors for all types of financial serviceshas led to an entirely new banking landscape. To remain competitive todayand viable tomorrowcommunity banks need to devote attention, staffing and financial resources to innovation, digital product mix, online customer engagement, technological advances, vendor partnerships and more.

The Graduate School of Banking at the University of Wisconsin's Digital Banking School is the first school of its kindfocused exclusively on demystifying these sometimes-intimidating topicsto help community banks move into and/or grow in the digital banking space. This immersive experience will showcase the key elements of a bank’s effective digital strategy and will be led by industry thought leaders who are experts in digital banking and innovation.

The curriculum of the school, which will start on Sept. 30, is divided into eight session that will be delivered live online in three-hour segmentswith breaksover the course of four weeks. Each session will be recorded for ease in scheduling. The modules are: Defining the Game, Get Off the SidelinesWhy Digital Banking, Which Version do You Want to Play, Create Your TeamThe People Factor of a Digital Bank, What Equipment Do You Need, Rules of the GamesCompliance and Cybersecurity, Promoting Your Digital Bank and Building Your Bank, and Program Wrap-Up: Keys to Success from a Winning Team. 

The school will be limited to 30 banks. Online delivery and per-bank fees allow organization-wide participation. Learn more register.

ABA 'Unconventional Convention' Scheduled for October 19-20

Registration is now open for ABA’s first-ever Unconventional Convention—a new virtual event taking place Oct. 19-20 that brings together live and on-demand content for bankers to help excel in their field, collaborate and strategize and plan for the challenges ahead. The Unconventional Convention will feature dedicated sessions for bank marketers, CFOs and operations professionals, agricultural bankers and CEOs, as well as sessions with a fintech and payments focus.‌

Keynoting the convention this year will be Federal Reserve Vice Chairman Rich Clarida, agricultural economist David Kohl and CNN political analyst Bakari Sellers. Additional keynote speakers will be announced in the coming days. ‌

To help bring bankers together during this critical time for the industry, ABA is offering special registration discounts for this event. Discounted team registration is available, along with a “bring the bank” option, through which institutions can register up to 25 bankers for less than the price of six individual registrations. Learn more and register.

 Compliance Alliance

Question of the Week

Question: When can borrowers with Paycheck Protection Program (PPP) loans submit their loan forgiveness applications?

Answer: As set out in Interim Final Rule #20, borrowers can submit a loan forgiveness application any time on or before the maturity date of the loan—including before the end of the covered period—if the borrower has used all of the loan proceeds the borrower is requesting forgiveness on.

Borrowers who do not apply for loan forgiveness within 10 months after the last day of the covered period, or, if the SBA determines that the loan is not eligible for forgiveness (in whole or in part), the PPP loan can no longer be deferred and the borrower has to begin paying principal and interest. If this happens, lenders are responsible for notifying the borrower of the first payment due date. Lenders also must report that the loan is no longer deferred to SBA on the next monthly SBA Form 1502 report filed by the lender. Unfortunately, it's still not clear to what extent lenders are allowed to refuse forgiveness applications from borrowers while the lender awaits further guidance from the SBA and/or Treasury, although some lenders are reportedly doing so.

See generally Interim Final Rule #20, here:

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Compliance Alliance offers a comprehensive suite of compliance management solutions. To learn how to put them to work for your bank, call 888.353.3933 or email and ask for our Membership Team.

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Contact Alisa Bousa, SDBA, at 800.726.7322 or via email.