Reach out to small businesses!

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. 

The reason is that surprisingly there is $100B left in the PPP fund as of this afternoon and it has slowed to a draw rate of only $2B per day. Many small businesses have been discouraged. You and we know you don't want to urge a loan – that is the small business’s decision – but urging them to consider it is very appropriate. 

Please contact individual small businesses, local business and community groups, churches… and, in particular, women and minority owned businesses directly or indirectly. This should be a favorable CRA factor, and may pay political dividends if negative attitudes about banks develop as discussed in the last paragraph. You also may want to share this information with local, state and federal public officials who can further distribute it and will be appreciative that banks are reaching out. 

We also encourage you to convey this by social media that the bank and its personnel use. You can post it and in fact you may locate prospective customers by mining such information. We understand you may use your own hashtag, but as of this afternoon we are now encouraging banks and their customers to report PPP successes and feel-good stories using and following the hashtag #Bankers4Good which is being used by state bankers associations and banks nationwide. That will allow us to see these good stories throughout the country.

In the meantime, we have encouraged our Colorado Members of Congress to seek changes in the PPP forgiveness factors, specifically 75/25, 8-week and June 30 restrictions. We will provide further information next week. We are concerned that these factors will result in small amounts of forgiveness for some small businesses which results in more debt to pay off in the two-year period. 

We are aware that these circumstances could result in intense small business frustration and anger. That may be vented at banks. Although they agreed to the PPP loan terms we think that in their rush to get the “free money” or simply to get needed cash a number of them did not truly understand terms – specifically the forgiveness factors – and that reality will not match their current perceptions of what will be forgiven and what will be remaining debt. Public officials and media portrayed the program early as “too good to be true.”

Please reach out to small businesses directly or indirectly.
Guidance on Investment Advisers Disclosure of Paycheck Protection Program Loans

The Colorado Division of Securities (the “Division”) within the Department of Regulatory Agencies (DORA) is providing guidance to State-licensed Investment Advisers (Advisers) who received or are considering applying for a forgivable loan under the Paycheck Protection Program (PPP).

Issue : Advisers have contacted the Division asking whether they need to disclose the PPP loans in their Form ADV filing.

Response : Pursuant to the terms of the PPP loan program, anyone receiving funds must certify that the loan is necessary to support the ongoing operations of the loan applicant. If you are certifying that you are experiencing conditions that are reasonably likely to impair your ability to meet contractual commitments to clients, it is the Division’s view that you would need to make a disclosure. 

Where to Disclose : If disclosure is warranted, Advisers must update Item 2 (Material Changes) of the Part 2A of Form ADV as a material change and disclose the PPP loan at Item 18 (Financial Condition). The PPP loan assistance must be disclosed until the loan is repaid or forgiven and the underlying condition that impaired the Adviser’s financial stability has been resolved. Further, the Adviser must report the loan as a liability on firm financial statements and ensure the firm still meets all applicable net worth requirements. 
The PPP loan does not need to be reported on the Form U4 because forgiveness of the loan is contemplated in the original loan terms and does not involve a new agreement by the creditor.

For additional guidance, please contact the Colorado Department of Regulatory Agencies (DORA) / Division of Securities at (303) 894-2320 or email us (Email: dora_SecuritiesWebsite@state.co.us | Secure/Encrypted Email: Secure Email ). For additional information, please see SEC and FINRA FAQ documents on COVID-19: Click here for SEC information and here for FINRA information. 
Colorado Bankers Association
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