The FDIC late Thursday (April 2) issued a revised FIL-33-2020 with corrected links to SBA and Treasury program info.
Against the backdrop of record U.S. unemployment claims, the federal bank deposit insurer on Thursday urged supervised institutions to consider deploying the Small Business Administration (SBA) loan programs created by recently enacted aid legislation dealing with the coronavirus (COVID-19) pandemic.
The Coronavirus Aid, Relief, and Economic Security (CARES) Act offers “multiple forms of relief” to small businesses through SBA-administered programs, and Treasury also offers small business loan programs, the Federal Deposit Insurance Corp. (FDIC) said in its Financial Institution Letter. The agency said it “encourages financial institutions to consider using these programs in a prudent manner as they actively work with small business borrowers with less financial flexibility to weather near-term operational challenges due to the Coronavirus Disease 2019 (referred to as COVID-19).”
The FDIC letter (FIL-33-2020) points specifically to two new SBA programs created by the CARES Act:
- the Economic Injury Disaster Loan program under Section 7(b) of the Small Business Act, which provides funds to small businesses to cover economic injury resulting from the disaster, such as a loss of revenue; and
- the Paycheck Protection Program, which provides loans to encourage certain qualified small businesses to retain employees through the COVID-19 pandemic and includes loan forgiveness subject to certain conditions.
The FDIC added that it “will not criticize financial institutions’ good faith efforts to prudently use the SBA and Treasury programs to work with small business borrowers affected by COVID-19.”
The SBA is streamlining its processes to enable more financial institutions to use these programs for small business borrowers affected by COVID-19, the letter notes. It states that updated information from the SBA on how financial institutions can access the new programs will be available beginning Friday via the FDIC’s Coronavirus (COVID-19) web page.
The Office of the Comptroller of the Currency (OCC) on Thursday also issued a bulletin informing supervised institutions about the above programs.
OCC Bulletin 2020-31