Bankers beware: Reports being made of CPAs seeking agent fees after the fact

CBA has been made aware of what appears to be a burgeoning trend of CPA firms approaching bankers, seeking compensation after helping customers prepare PPP loan applications.

Bankers have alerted CBA that they have been approached by CPA firms (or by customers working on their behalf) with whom the bank has no agreement, asking that lenders pay an agent fee for work complete toward the loans.

There is still plenty of Paycheck Protection Program money left
Small businesses encouraged to consider PPP funds

CBA actively encourages banks to reach out to small businesses to urge them to consider applying for a PPP loan if they haven’t already.  

“This could be a good opportunity for individual small businesses, particularly for those owned by minorities and women, to pursue this option,” said Don Childears, chief executive officer of the Colorado Bankers Association, noting that those small business sectors are often classified as socially or economically disadvantaged.

As of last night, financial institutions of all sizes have processed almost 2.6 million round 2 PPP loans worth $188 billion of the $310 billion to rush relief to small businesses and keep American workers employed. The borrowing rate had slowed to a rate of $2 billion per day.

The SBA told the Washington Business Journal today that it believes the slowdown is due to several factors.

"...we have met the initial demand from both small businesses and eligible nonprofits, and we are now approving at a much slower rate due to decreased demand, which is by far the biggest reason," said SBA spokesman  Christopher Hatch .

Roughly a half trillion dollars already has been loaned to small businesses across the U.S. as part of the economic recovery package in response to the COVID-19 crisis.

EID loans now available to ag businesses affected by COVID-19 pandemic

Agricultural producers as of May 4 are eligible for the Small Business Administration’s Economic Injury Disaster Loan and EIDL Advance programs. SBA last week reopened the portal—which had been closed since April 15—in a limited capacity after funding was authorized by Congress through the Paycheck Protection Program and Healthcare Enhancement Act. The legislation, which was signed into law last week by President Trump, provided additional critical funding for farmers and ranchers affected by the coronavirus pandemic.
 
To help facilitate this important change to EIDL and EIDL Advance assistance eligibility, SBA reopened the loan and advance application portal to agricultural enterprises only. Ag producers that submitted an EIDL application through the application portal prior to the legislative change will have their applications automatically processed and do not need to reapply. EIDL applications submitted prior to April 15 will be processed on a first-in, first-out basis. For more information, visit sba.gov/Disaster .

Bankers are encouraged to contact lawmakers urge them to include the Enhancing Credit Opportunities in Rural America Act in the next COVID-19 relief bill. The ECORA Act would promote greater access to credit and reduce borrowing costs for ag producers, providing much-needed capital to the nation's farmers and ranchers. Contact your lawmakers now .
Fed: Banks entered coronavirus pandemic in strong condition

The nation’s banks “entered the current crisis well positioned to support continued lending” during the pandemic, the Federal Reserve said in its supervision and regulation report on Friday . The Fed noted that bank capital and liquidity positions were strong before the coronavirus outbreak began, enabling them to absorb higher credit losses, continue lending and meet their obligations to creditors while meeting the needs of households and businesses.
Mnuchin: Fixes possible for small-business loan program for restaurants

Treasury Secretary Steven Mnuchin said Monday he is looking at  “technical fixes” to address problems in the forgivable-loan program   for small businesses, noting that such measures could target the restaurant industry.

Mnuchin said on CNBC that he would need to work with Congress to change the broad parameters of the program. But he said “technical fixes as we see different issues” might be possible. “One of the things we’re particularly sympathetic to are the restaurants,” Mnuchin said.
Loans under the Paycheck Protection Program are forgivable if recipients use 75% of the money on payroll costs and rehire laid-off staff.

But restaurants across the country are finding that reopening  hasn’t brought sales back  to levels from before the pandemic, as customers remain skittish and social-distancing guidelines limit the number of diners who can sit-in for meals.
SBA codifies extensions for PPP safe harbor, Form 1502 filing

The Small Business Administration late Friday issued an interim final rule making technical changes related to the safe harbor for firms that have access to other sources of capital to repay Paycheck Protection Program loans. The rule implements an extension announced by SBA earlier this week. Borrowers who applied for PPP loans prior to April 24, 2020, who repay their loan in full by May 14, 2020, will be deemed by SBA to have made the required certification of economic need in good faith.
 
SBA also extended the deadline for lenders to file the yet-to-be released Form 1502 in order to receive their lender processing fee. As SBA previously announced, lenders must file Form 1502 within 20 calendar days after the PPP loan is approved. For loans approved before Form 1502 is made available, the form must now be filed by May 22.
 
As of the end of the day Friday, SBA had approved 2.6 million round two PPP loans amounting to $189 billion, up approximately $4 billion from the total approved on Thursday. Of that total, approximately 1.2 million loans were made by lenders with over $50 billion in assets, 363,000 by lenders with $10-50 billion in assets and 973,000 by lenders with under $10 billion. The average loan size for round two was $73,000.
 
SBA also provided a breakdown of loans made by state or U.S. territory and by loan size. It also provided information on loans made by community development financial institutions and minority depository institutions, as well as nonbank lenders and credit unions. Read the IFR . View the SBA data .‌

The Federal Reserve plans to add "sensitivity analyses" concerning coronavirus disruptions to bolster 2020 stress tests. The Fed said it will conduct "alternative scenarios and certain adjustment to portfolios to credibly reflect current economic and banking conditions."
IRS: 130M Economic Impact Payments distributed to Americans

130 million Americans received economic impact payments totaling more than $200 billion within the first four weeks of the program, according to updated data released by the IRS on Friday . The data included a breakdown of EIPs issued by state, as well as the total number and amount of EIPs sent to individuals with foreign addresses. The IRS is expected to deliver a total of 150 million payments to eligible individuals and households in the coming days as authorized by the CARES Act.

Meanwhile, efforts are underway to help the unbanked and underbanked open bank accounts to receive the payments electronically.

Colorado Bankers Association
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