SDBA eNews

March 18, 2021

IRS Issues EIP FAQs as Direct Deposits Begin Moving

The IRS announced last Friday that the third round of economic impact payments will begin reaching Americans over the next week.

“Additional batches of payments will be sent in the coming weeks by direct deposit and through the mail as a check or debit card. The vast majority of these payments will be by direct deposit,” the IRS said. “Some Americans may see the direct deposit payments as pending or as provisional payments in their accounts before the official payment date of March 17.”

The IRS added that it would update its Get My Payment tool for consumers to check the status of their EIPs. While individuals who have not filed a 2019 or 2020 tax return will be eligible to claim their EIPs on a newly-filed tax return, the Get My Payment portal will only provide status updates for those who filed in 2019 or 2020 with direct deposit. The IRS also issued FAQs for consumers that cover EIP amounts, eligibility and payment status.

In response to confusion about when consumers can access the latest round of economic impact payments, ABA joined a coalition of nine financial trade groups on Tuesday in issuing a statement confirming that the IRS chose March 17 for EIP funds to become available. An estimated 100 million payments were expected to arrive without incident on that date.

The groups explained that the IRS sent an initial wave of EIPs through the ACH system over the weekend for payment on March 17. “The actual funds will be sent to the banks and credit unions on March 17, at which time funds will be made available to customers. Until that time, the funds remain with the government,” the statement noted. “While the IRS could have chosen to send the funds via same-day ACH or provided for an earlier effective date, it chose not to do so. It is up to the sender, in this case the IRS, to decide when it wants the money to be made available and the IRS chose March 17.” Read the statement.

To help bankers prepare for this third round of payments and to complement the IRS FAQs, ABA has updated its backgrounder on EIPs, as well as a set of talking points they can reference when fielding questions from customers and the media.

SBA Now Accepting Second-Draw PPP Applications from 2021 First-Draw Borrowers

The Small Business Administration is now accepting second-draw PPP loan applications from borrowers who previously submitted first-draw loan applications in calendar year 2021.

According to SBA, in order for these borrowers to receive a second-draw loan, their first-draw loan “must be fully disbursed and reflected as such within E-Tran. This process can occur naturally with the 1502 process or via direct updates in E-Tran if required,” SBA said. To be eligible for a second-draw loan, the borrower must have received a first-draw PPP loan and have used, or will use, the full amount of the first-draw PPP loan on or before the expected date on which the second-draw PPP loan is disbursed to the borrower.

SBA also added two additional organizational types—single member LLCs and qualified joint-venture (spouses)—that can be used by borrowers when using the Schedule C gross income PPP calculation. SBA will update its PPP platform and the E-Tran system in the coming days to reflect these changes. For more information, email [email protected]

House Clears PPP Extension Bill

By a vote of 415 to 13 on Tuesday night, the House passed an ABA-supported bill that would extend the Small Business Administration’s Paycheck Protection Program application deadline from March 31 to May 31.

The bipartisan bill—which was introduced in the House by Reps. Nydia Velasquez (D-N.Y.) and Blaine Luetkemeyer (R-Mo.)—would also give SBA an additional 30 days to process loan applications received by the new deadline before the program ends on June 30. A companion bill has also been introduced in the Senate by Sens. Ben Cardin (D-Md.), Jeanne Shaheen (D-N.H.) and Susan Collins (R-Maine).

The ABA and a coalition of other trade groups called on Congress on Monday to extend the application period for the program. In a letter to congressional leaders, the groups flagged several outstanding issues with the program, including a lack of progress on hold and error codes, application rejection due to Taxpayer Identification Number issues or mismatches and "many unresolved technical problems with the current PPP process." The groups added that "delays and denials may put many applicants in danger of not making the March 31 authorization deadline." Read the letter.

ABA Urges Lawmakers to Advance SAFE Banking Act

In a letter to several members of the House Financial Services Committee yesterday, ABA expressed support for the SAFE Banking Act of 2021, which would provide a safe harbor for depository institutions seeking to serve legitimate cannabis-related businesses in states where such activity is legal.

The bill—which was passed by the House in the last Congress but was not taken up in the Senate—is expected to be reintroduced in the House this week.

Currently, 36 states have legalized cannabis for medical or adult use, but current federal law prevents banks from safely banking cannabis businesses, including ancillary businesses that provide them with goods and services. "Our member banks find themselves in a difficult situation due to the conflict between state and federal law, with local communities encouraging them to bank cannabis businesses and federal law prohibiting it,” the Association said. “Congress must act to resolve this conflict between state and federal law." Read the letter.

FDIC Report Highlights Continued Strength of Farm Banks

Farm banks have held up well despite challenges to the agriculture industry since 2014, and problem loan levels have remained modest, according to a new report from the FDIC.

Cautious real estate lending during a boom in farmland values has given farm banks the flexibility to work with financially stressed borrowers by tapping into their farmland equity, according a new report published in the FDIC Quarterly.

Net farm income for 2020 is expected to increase 46% to $121.1 billion, due in part to record levels of government assistance and a rebound in commodity prices, the report said, but "absent a sustained improvement in agricultural conditions, stress is likely to continue for some farmers and their lenders." Meanwhile, “early forecasts suggest 2021 will not be as strong as 2020, but will still be above long-term average,” the FDIC said.

The paper also looks at weaknesses in the ag sector from 2014 through 2019, the effects of agricultural issues on farm bank condition during the downturn and potential challenges ahead, such as highly leveraged farmers. Read the report.

On a related note, the ABA will hold a free webinar "The State of Ag Banking in 2021" on Tuesday, March 2,3 at 11:30 a.m. CDT. Participants will hear an update from ABA's experts on the latest in agricultural banking and receive an overview of ag banking resources. Learn more and register

Banking Agencies Request Public Comment on Private Flood Insurance Guidance

The banking agencies last Thursday requested public comment on 24 proposed interagency questions and answers about private flood insurance. The new Q&As cover both mandatory and discretionary acceptance of private flood insurance for loans subject to the mandatory purchase requirement, as well as general flood compliance guidance. The agencies noted that the proposed Q&As are intended to help lenders comply with the private flood insurance provision of the Biggert-Waters Flood Insurance Reform Act of 2012.

Comments on the proposed additions to the interagency Q&As are due 60 days after they are published in the Federal Register. Read the proposed Q&As. For more information, contact ABA’s Diana Banks

Recording Available of SDBA Cannabis/Hemp Banking 101 Webinar

After a flurry of activity surrounding cannabis during the 2021 Legislative Session, medical marijuana will become legal on July 1, 2021. Is your organization ready to bank the industry?

The SDBA hosted the Cannabis/Hemp Banking 101 Webinar on Jan. 20-21, 2021. If you were not able to take part and are now looking for more information, the SDBA is extending the invitation to watch the recorded webinar. To see session details, click here. To purchase the recorded webinar for $275 and request the link to watch it, click here.

Application Deadline Nearing for Bankers Foundation Named Scholarships

The South Dakota Bankers Foundation annually offers five named scholarships awarded directly to college students who are pursuing a career in banking or finance. Applicants must be a junior entering their senior year of college during the 2021-2022 school year. 

  • $4,000 Alan M. Graff Scholarship
  • $3,000 David S. Birkeland Scholarship
  • 3,000 Herman Lerdal Scholarship
  • $3,000 Joyce Hazeltine Scholarship
  • $1,500 Deb Gates Scholarship

The deadline to apply is Friday, March 26, 2021. Scholarship application form.

 Compliance Alliance

Question of the Week

Question: For a cashier's check, and holds, under Reg. CC, isn’t the bank required to make the first $5,525 available by the next business day?

Answer: Actually, Reg. CC allows the bank to combine the large deposit hold with a case-by-case hold. This would make the first $225 available next business day, $5,300 available the second business day, and the remainder on or before the seventh business day. 

If a depositary bank invokes an exception contained in paragraphs (b) through (e) of this section with respect to a check described in §229.10(c)(1) (i) through (v) or §229.10(c)(2), it shall make the funds available for withdrawal not later than a reasonable period after the day the funds would have been required to be made available had the check been subject to 229.12. 

§  229.13(h)(2): 

Not a member? Learn more about membership with Compliance Alliance by attending one of our live demos:

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.

For timely compliance updates, subscribe to Bankers Alliance’s email newsletters.

  IntraFi Network

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Contact Alisa Bousa, SDBA, at 605.224.1653 or via email.