Independent Community Bankers Express Doubt PPP Can Be Rolled Out As Is
Update: The interest rate has increased to 1%.
The nation’s voice for community banks, the Independent Community Bankers of America, penned a letter to Treasury Secretary Mnuchin and SBA Administrator Carranza yesterday to urge them to make immediate changes to the planned PPP program slated to be rolled out tomorrow.
“We strongly recommend that you make changes to the guidelines before the Program goes live so that it will work as intended by Congress,” the letter states.
It goes on to explain that the proposed .5% interest rate is below the break-even cost for a bank and should be raised to 4% to allow them to break even. Further, that the loan terms of 2 years should be extended to 10 years to alleviate the hardship the short duration will create for small businesses, and that the restrictions on the use of the loan proceeds be amended.
The ICBA also expressed frustration with the lack of detail afforded to documentation required as well as to the uncertainty of how and when the SBA will reimburse them for losses.April 29, 2020