Treasury Issues Guidelines, Application for SBA Paycheck Protection Program

The Treasury Department on Tuesday issued much-anticipated guidance for the Paycheck Protection Program, which starting this week will provide up to $350 billion in fully-forgivable loans to help small businesses maintain payrolls during the coronavirus pandemic. The loans are fully guaranteed by the Small Business Administration, but the SBA will waive all SBA guaranty fees. PPP loans are made for two years at a 0.5% fixed rate with payments deferred for six months.‌

All banks, as well as a broad range of nonbanks, are eligible to make PPP loans. Existing SBA-certified lenders will be given delegated authority; others must be approved before making loans. Banks that have not yet been certified with the SBA should submit an application to [email protected]. The SBA will quickly verify that banks applying are federally regulated, and new applicants will be able to process applications as soon as Friday, according to a senior administration official.‌

To underwrite PPP loans, lenders will need to verify that the borrower was in operation on Feb. 15, 2020, and that it had employees for whom it paid salaries and payroll taxes. The lender will also have to verify the dollar amount of average payroll costs. The SBA will not review loan applications, according to a senior administration official, but lenders will receive an SBA loan number and verify that the applicant has not already received a PPP loan.‌

The SBA will pay the lender a processing fee calculated on the loan balance, ranging from 1% for loans of more than $2 million to 5% for loans of $350,000 or less. PPP loans may be sold in the secondary market, and the SBA will not collect fees for guarantees sold. The guidance includes fee caps for agents assisting with loan applications.‌

Small businesses and sole proprietorships—generally, those with 500 or fewer employees—may apply for PPP loans starting on Friday, April 3; independent contractors and self-employed workers can apply starting April 10. PPP loans will be fully forgiven when used for payroll costs, interest on mortgages, rent and utilities, with at least three quarters of the forgiven amount being used for payroll; forgiveness is based on employers maintaining headcount or quickly rehiring and maintaining salary levels.‌

SDBA: Banks Are an Essential Service; Your Money is Safe, Sound and Easily Accessible

C Banks Are an Essential Service OVID-19 is causing many concerns with consumers, but access to your money shouldn’t be one of them. Banks are considered an essential service, so they will continue to operate and you will have uninterrupted access to your money. This is the message the SDBA shared via social media yesterday and encourages banks to share as well.

Here are the top five things consumers should know about their money and South Dakota banks:

You have continued access to your funds and bank services. Banks are considered an essential service, which means you continue to have access to your funds through in-person services and self-service tools, such as mobile or online banking.
Your money is safe, secure, and insured. FDIC deposit insurance currently covers up to $250,000 per person and ensures the security of consumers’ funds. Congress is working on legislation providing authority for the FDIC to increase this coverage through December 31, 2020. No consumer has lost a single penny in the history of this insurance fund.
Your bank is prepared. Banks are prepared for situations like a pandemic, with tested and proven business continuity plans and procedures. Although state and federal regulations require banks to be prepared, you’ll find that community banks are prepared because they want to continue to serve, not because they are required.
Your bank is looking out for you, your family, and your business. South Dakota's banks are proactively contacting customers, offering assistance in the form of fee waivers, loan payment deferral programs, credit card payment relief, suspension of foreclosure and repossession programs, and more. Bankers are also helping their customers apply for grants offered at the state and federal level as well. Congress is also working on providing more assistance to businesses through banks in the form of additional changes to federal programs, such as the SBA program.
Your banker is listening and ready to act. Customers should contact their banker to talk about how COVID-19 is affecting them and how the bank can help. South Dakota's banking industry is strong and ready to help.

The SDBA will continue to post COVID-19 updates and resources on its website.

Nichols: America's Banks Strong, Ready to Meet Customer Needs

The U.S. banking system is strong, well-capitalized and working diligently to help individuals and businesses work through the challenges they are facing as a result of the coronavirus pandemic, ABA President and CEO Rob Nichols said yesterday in an interview with Cheddar TV. “Banks are in overdrive helping customers and clients,” and have been doing so since the earliest days of the crisis, Nichols said.

For example, bankers have been working constructively with customers to offer forbearance or payment deferral options ahead of actions by the government and regulatory agencies, while also offering services digitally to meet customers’ banking needs. Banks are also playing a pivotal role in facilitating the distribution of $350 billion in loans to small businesses through the Small Business Administration’s Paycheck Protection Program, a new program that was created by the CARES Act signed by President Trump last week.

“We are entering this health care crisis from a position of strength,” Nichols said of the banking sector, thanks to a combination of industry-led, regulatory and legislative changes that have taken place over the past decade. “The 5,100 banks in the U.S. are doing everything they can to help borrowers.” Watch the interview.‌

SD Congressional Delegation Urges USDA to Provide Immediate Assistance to Cattle Producers

Sen. Mike Rounds, Sen. John Thune and Congressman Dusty Johnson last week helped secure support for South Dakota’s farmers and ranchers in the Coronavirus Aid, Relief and Economic Security (CARES) Act, which was signed into law on Friday, March 27. The bill provides $14 billion to replenish the U.S. Department of Agriculture’s Commodity Credit Corporation and will also provide $9.5 billion in emergency funding to support certain producers, including livestock producers, affected by the COVID-19 pandemic.

Yesterday, South Dakota's congressional delegation joined more than 140 other members of Congress to send a bipartisan, bicameral letter to U.S. Department of Agriculture (USDA) Secretary Sonny Perdue requesting that he provide immediate assistance to cattle producers by using the resources provided in the CARES Act. Doing so would help facilitate the stabilization of farm and ranch income for producers who are facing market volatility in the wake of the COVID-19 pandemic and economic fallout.

“The COVID-19 outbreak has demonstrated the need for domestic food security,” the members of Congress wrote. “All farmers and ranchers are vital to our country’s ability to keep food on the table in a future pandemic or related crisis, and many producers, including young producers, are often highly leveraged and cannot fall back on years of equity in a time of crisis. As such, we urge you to quickly deliver relief to producers as we work to lessen the economic impact of this pandemic.”

Read the full letter.

Fed Makes Temporary Change to Supplementary Leverage Ratio Calculation

The Federal Reserve announced yesterday that it will temporarily exclude U.S. Treasury securities and deposits at Federal Reserve Banks from the calculation of the supplementary leverage ratio for holding companies, effective March 31. This action—the latest the Fed has taken to allow the continued flow of credit to households and businesses—comes amid deteriorating conditions in the Treasury market, significant inflows of consumer deposits and increased reserve levels.

“The board is providing the temporary exclusion in the interim final rule to allow banking organizations to expand their balance sheets as appropriate to continue to serve as financial intermediaries, rather than to allow banking organizations to increase capital distributions, and will administer the interim final rule accordingly,” the Fed said, adding that this change would temporarily decrease tier 1 capital of holding companies by approximately 2% in aggregate. Read more.

Podcast: How One Bank Workforce Went Fully Remote Amid COVID-19

As the coronavirus pandemic began to spread across the country, Live Oak Bank did what almost all banks—along with other businesses—did: sent employees to work at home to contribute to social distancing. But unlike most banks, Live Oak had every employee working remotely. The bank has kept all operations up and running remotely, just as it did when hurricanes have closed its Wilmington, North Carolina, headquarters.

On the latest episode of the ABA Banking Journal Podcast—sponsored by Reich and Tang Deposit Solutions—Live Oak CTO Brian Lora addresses how the bank’s cloud-based infrastructure helps it stay resilient when the operating environment changes. He also offers tips for moving toward a fully-remote workforce and practices for maintaining a productive work culture in a telework context. Listen to the episode.

Deadline Today to Run for an SDBA Board Seat

Elections for the SDBA’s Board of Directors are scheduled for April. Two directors have terms that expire on April 30, 2020, in addition to a vacancy and the election of a new sized-based category. Elections will take place in Group 1, Group IV, Mid-Size Community Bank Category and the new Community Bank Category.

If you are interested in running for one of the Board seats, please contact one of the nominating committee members listed here by Thursday, April 2, 2020. Please also submit a short bio and headshot photo for the voting ballot to Alisa Bousa. Newly-elected Board members will take office on May 1, 2020, and serve a three-year term expiring April 30, 2023 (except for the Group I seat which is a two-year term). Questions, contact Alisa Bousa.

Online Education Available Through SDBA

While social distancing efforts remain underway and with many of the SDBA’s meetings and events canceled or postponed, we remind members of a variety of online educational resources.

Total Training Solutions (TTS): TTS offers live and on-demand webinars on a wide variety of topics. TTS has extended its OnDemand access period for its Live Plus Five webinars to 60 days and is waiving the $75 per location fee for additional locations.
Graduate School of Banking (GSB): The GSB Online Seminar Series offers a convenient, cost-effective way to access quality educational opportunities. GSB seminars are designed to meet the dynamic learning needs of today’s busy financial professional and are delivered by some of today’s top industry experts. When you register, you’ll have access to the live presentation as well as a recording of the live session. There is no additional fee to view the recording.
American Bankers Association (ABA): The ABA offers a comprehensive source for training and education brought to you through the SDBA, your local ABA training provider. ABA training includes extensive learning opportunities suited to specific job roles, in both facilitated and self-paced online formats.
SBS Cybersecurity: SBS is a leading provider of cybersecurity education in the financial industry. SBS is uniquely dedicated to delivering quality, industry-specific education to financial institutions to empower clients to take security into their own hands.

The SDBA is here to support its members through information sharing, communications and educational opportunities. If we can be of assistance in helping you find specific offerings on specific topics, or if you have any questions on these platforms, contact Halley Lee. Visit the SDBA's website for the latest updates on the SDBA’s conferences and seminars.

Question of the Week

Compliance Alliance Pandemic Resources for Community Banks

Question: Does our bank’s initial privacy policy notice have to be on 8.5 x 11 size paper?

Answer: Assuming you are using the model forms, there is not a particular paper size required. However, you have to ensure that the font is easily readable, in at least 10-point.

Each page of the model form must be printed on paper in portrait orientation, the size of which must be sufficient to meet the layout and minimum font size requirements, with sufficient white space on the top, bottom, and sides of the content. Section B(3)(c) of Appendix A to 12 CFR §1016: https://www.consumerfinance.gov/policy-compliance/rulemaking/regulations/1016/A/#c

Financial institutions that use the model form must use an easily readable type font. While a number of factors together produce easily readable type font, institutions are required to use a minimum of 10-point font (unless otherwise expressly permitted in these Instructions) and sufficient spacing between the lines of type. Section B(3)(a) of Appendix A to 12 CFR §1016: https://www.consumerfinance.gov/policy-compliance/rulemaking/regulations/1016/A/#a

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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.