Pandemic Aid Package Provides Relief For Lenders To Help SMBs

The almost $900 billion U.S. pandemic aid package ratified by lawmakers Monday (Dec. 21) following months of debate will assist financial institutions by relaxing an important small-business lending initiative’s regulations, providing deferred loan payment accounting relief, and bolstering the financial position of borrowers, Reuters reported.

American Bankers Association Chief Executive Rob Nichols said, as per Reuters, that the deal provides multiple provisions supported by the ABA “that will allow banks to provide additional help to individual and business customers under financial stress from the pandemic.”

Congress’s pandemic aid package includes $284 billion in further funds for the Paycheck Protection Program (PPP), lengthened joblessness benefits of $300 weekly and single $600 checks for many individuals.

The workflow for writing off PPP loans is one of the largest wins in the bill. Lenders have distributed over five million loans with an overall value of $525 billion for the government. For loans of a maximum of $150,000, the law makes forgiveness less burdensome.

The bill lets companies affirm on a single-page document that they used the money for workers’ paychecks in addition to other company expenditures. Moreover, it allows the expenditures to be eligible for deductions.

In addition, the bill strengthens wording vowing that lenders will not be on the hook if borrowers contravene PPP regulations, affirming that enforcement action won’t be taken against them if they adhered to the appropriate state and federal rules and worked in good faith.

The news comes after Berkshire Hathaway Chairman Warren Buffett asked Congress to offer additional Paycheck Protection Program (PPP) loans to small companies to assist them in weathering the pandemic slowdown, which he compared to “an economic war.”

“I think the country owes it to the millions of small-business people … just renew the PPP and get us to the end of the tunnel,” Buffett told CNBC during a mid-December interview. “When we went into World War II, a lot of industries were shut down; everything went to the defense production. Well, we’ve shut down a lot of people in this particular induced recession, and others are prospering.”