The Wisconsin Bankers Association has been invited to testify on the SBA Payment Protection Program before the Assembly Committee on State Affairs today. Below are highlights of the testimony given by Rose Oswald Poels, WBA president/CEO, in addition to her full testimony. 

Testimony Highlights 

  • Wisconsin’s high PPP volume served over 43,000 small businesses. Wisconsin’s volume for the first round of PPP loans put our state in 14th place overall in the nation. In under two weeks, 43,395 small Wisconsin businesses received approval for a total $8.3 billion in relief.  
  • The rules for PPP loans continue to evolve. Federal agencies hadn’t fully written the rules before launching the program and continual to change and update them. 
  • PPP Loan forgiveness is not automatic. The over 43,000 borrowers are responsible for tracking and documenting how they use PPP funds. 
  • PPP has broad reach. According to SBA’s data, the number of PPP businesses helped in WI is about 30% of all Total Employer Establishments in Wisconsin (according to 2017 Census numbers) and 71% of total Eligible Payroll – SBA Approvals through April 16. 
  • Borrowers have access to a free WBA PPP guide and calculator. The guide and the calculator are tools borrowers can use to better understand the forgiveness portion of PPP loans. 

Full Testimony 

Assembly Committee on State Affairs 
Informational Hearing 
April 30, 2020 

Testimony of Wisconsin Bankers Association 
By President/CEO Rose Oswald Poels 

Thank you, Chair Swearingen, and Committee Members, for the opportunity to speak at this important informational hearing today. The Wisconsin Bankers Association is a statewide trade association representing nearly 230 financial institutions with a retail branch presence in the state of Wisconsin. I look forward to talking with you about the Paycheck Protection Program, which I have been asked to address, and its impact on Wisconsin businesses.   

We are all living through unprecedented times, reacting to situations none of us have ever lived through before. It has been truly incredible to watch the power of people coming together to help solve problems while they are happening, all with the shared goal of helping to keep people healthy and safe as best we can.   

Wisconsin’s financial institutions are on the economic frontlines of this crisis and have been since its inception. Before government programs were even developed, financial institutions across the state already were proactively engaging with their customers to determine the impact the COVID-19 pandemic was having on their financial well-being. From the moment emergency health declarations were made at the state and federal level only 49 days ago, we started hearing concerns from customers about their financial stresses. After only a few days, economic hardship stories began surfacing as people took steps both on their own and in response to various government mandates and emergency orders to avoid public places or not go into an office building to help mitigate the spread of the virus.    

Financial institutions across the state began their own relief programs to help customers through this difficult time. Many bankers worked with customers to defer payments; some were principal deferments, and some were both principal and interest payment deferments for 30, 60 or 90 day periods. Special small dollar loan programs were also created, among other initiatives. Shortly thereafter, government supported programs began surfacing at the federal level and in Wisconsin, WEDC launched its 20/20 program through CDFIs. 

Overview of the Paycheck Protection Program 

The focus of my testimony today is on the federal Paycheck Protection Program, or “PPP.” This program was launched on March 27, 2020, when the President signed the Coronavirus Aid, Relief and Economic Security Act (CARES Act) to provide emergency assistance and health care response for individuals, families and businesses affected by the coronavirus pandemic. The Small Business Administration (SBA) received an unprecedented amount of funding and authority through the Act to modify existing loan programs and establish a new loan program to assist small businesses nationwide adversely impacted by the COVID-19 emergency. Section 1102 of the CARES Act temporarily permits SBA to guarantee 100 percent of a new 7(a) loan type called the “Paycheck Protection Program (PPP),” and $349 billion was allocated to this effort.  

PPP provides for forgiveness of up to the full principal balance and accrued interest for loan proceeds used for covered purposes so long as employee head count and compensation levels are also maintained during the covered 8-week period. The maximum amount of money that can be borrowed is a formula based on the average monthly payroll costs as that is defined in PPP for calendar year 2019 multiplied by 2.5.  

Within less than 10 days, this first round of money was completely allocated out to 1,661,367 small businesses by 4,975 lenders across the country. Wisconsin’s volume put our state in 14th place overall after this first round of PPP money based on approved loan dollars at over $8.3 billion. According to SBA’s data, Wisconsin lenders approved 43,395 loans which means we helped 43,395 small businesses in this state since any business can only have one PPP loan.  

I am so proud of how quickly Wisconsin financial institutions jumped into this program to help customers despite the rules not being fully written and continually evolving even to this day. And because the volume of lenders across the country participating in this program was so high, our bankers worked late nights and over weekends to ensure that small businesses in Wisconsin could participate in this program because the systems were open virtually 24/7.  

Even before the first round of money was exhausted, it was clear that a second round of PPP funding would be needed to meet the demand. As a result, on April 24, 2020, the President signed the Paycheck Protection Program and Health Care Enhancement Act, which provided another $310 billion of additional funding and authority for PPP. Applications for this second round of PPP opened this past Monday and nationally as of 4 p.m. yesterday, April 29, there were over 960,000 approved loans from over 5,300 lenders totaling nearly $90 billion. The breakdown by size of lender is as follows: 

Lenders < $10B
Number of approved loans: 587,000+ 
$ volume of approved loans: $43B+   

Lenders btw $10B – $50B
Number of approved loans: 206,000+ 
$ volume of approved loans: $20 billion+ 

Lenders > $50B
Number of approved loans: 167,000+ 
$ volume of approved loans: $25 billion+ 

Small Business Considerations in Forgiveness Phase 

With all the media attention surrounding the program, and the constantly evolving, and sometimes changing nature of interpretations by the SBA and Treasury, both small businesses and lenders continue to have unanswered questions. At this point, many of the outstanding issues are focused on the forgiveness phase of the program. As a result, WBA created a toolkit along with a forgiveness calculator for small business borrowers that I included with my testimony for your information, to try and help both lenders and small businesses better understand what we believe the forgiveness phase will look like based upon current law and rules. However, we are all waiting for guidance to be finally issued so this document is subject to change based on final rules.  

When PPP was first available, there was a race to get an application in for the justified fear of the money running out. Congress provided for the program to be available until June 30, 2020, so many thought that a borrower could start the 8-week covered period at any point in time during the program. However, through the issuance of an FAQ, it became clear that the payroll costs that would be forgiven were only those actually incurred during the 8-week period that began when the loan proceeds were first disbursed. And, that same FAQ stated that lenders must disburse loan proceeds within 10 calendar days of an application’s approval. Consequently, some businesses that participated in the program assuming their entire loan amount would be forgiven by SBA will discover that is not the case because their actual payroll costs incurred during this 8-week covered period are significantly less than the formula used to calculate their maximum loan amount.  

In addition, forgiveness amounts are reduced by one or more factors based on applicability. For example, while payroll costs include employer costs for family, medical or sick leave, any qualified sick and family leave wages for which a credit is allowed under the Families First Coronavirus Response Act, will be excluded from the definition of “payroll costs.” Loan forgiveness will also be reduced if full time equivalent employee headcount decreases, and/or if the business decreases salaries and wages by more than 25% for any employee who made less than $100,000 annualized income in 2019. Finally, no more than 25% of the total amount forgiven can be comprised of non-payroll costs, which are interest on covered mortgage obligations, rent pursuant to a covered lease obligation, or covered utility payments. 

The burden to track and document all of these expenses is on the small business borrower in order to request forgiveness of the loan. In the toolkit, WBA provides a minimum documentation checklist to help borrowers understand what they should be tracking during this 8-week covered period. For any monies not forgiven, it results in a 2 year loan at an interest rate of 1% with the first 6 months of principal and interest payments deferred. 

Finally, I want to thank the members of this committee, along with the other members in the Assembly and Senate for working on critical legislation needed to ensure that businesses were not taxed at the state level on the forgiveness amount of any PPP loan. WBA appreciates the Governor signing WI Act 185 to provide parity for small businesses in our state tax law with that of the federal law for these forgivable loan amounts.  

Conclusion 

The impact of this pandemic is being felt by everyone, and Wisconsin financial institutions are doing all they can to work with their customers to mitigate the financial impact as much as possible. WBA member banks have led the way in actively advocating for Wisconsin small businesses through our high participation rates in PPP, among other relief efforts. Banks are the cornerstones of their communities, driving Wisconsin’s economy. The trusted advisor role our bankers serve for their customers has never been more important than it is now to help ensure their financial well-being through this health crisis.    

Thank you very much for the opportunity to speak on PPP at today’s informational hearing. I would be happy to answer any questions. 

By, Eric Skrum

As our state and nation begin to emerge from the COVID-19 pandemic, banks should start their reopening planning process with this Reopening Resource Center from WBA. This downloadable PDF contains several sections of information designed to facilitate bank decision-making in how and when to reopen, including checklists for each phase outlined in the Badger Bounce Back plan, questions to consider throughout reopening, recommendations from WBA, downloadable print resources, and a directory of third-party resources (also listed below on this site). The Reopening Resource Center will be updated as new information and guidance becomes available.

Last updated: August 19, 2020.

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By, Amber Seitz

Thank you for everything you and your bank do for your community.  

Here is our way of personally saying “thank you” to each and every one of you. 

 

By, Eric Skrum

Note: This document was revised on May 4, 2020 at 8:30 a.m.

By, Eric Skrum

Statement on garnishment of CARES Act stimulus checks by Rose Oswald Poels, president and CEO, Wisconsin Bankers Association.  

“Wisconsin’s banks must follow the law and legal court orders without exception. If a court has ordered a garnishment, banks are obligated to follow the law.

Amid the current crisis, WBA has joined the American Bankers Association and Independent Community Bankers of America in calling on Congress and the administration to designate that the government’s economic impact payments are not eligible for garnishment (read the letter to Congress here). However, unless Congress acts, banks will continue to be obligated to follow the law and legal court orders.

Wisconsin banks are already offering a range of assistance to customers who are experiencing financial hardship due to the pandemic including fee waivers, loan modifications, and forbearance. Banks will continue to use all options available to them to provide relief to customers.

There are specific instances where banks have discretion. In situations where a bank customer may have a negative balance on their account, the bank has discretion to offset the checks. However, many institutions may elect to forgo any offset depending on the customer’s specific situation.

I encourage any customer experiencing financial difficulty to contact their banker to discuss options.”

By, Amber Seitz

Last updated on June 24, 2020

By, Eric Skrum

Wisconsin bankers have been working non-stop to provide their small business customers with access to the Small Business Administration’s (SBA) Paycheck Protection Program (PPP) loans. Those efforts have paid off as Wisconsin is ranked 10th in the nation in loan applications approved and dollars approved under the program, according to the latest SBA numbers. 

Wisconsin’s SBA lenders have approved over 31,000 PPP loans and over $7 billion in funds as of April 13.  

“This is truly an impressive effort from Wisconsin’s banks,” said Rose Oswald Poels, president and CEO, Wisconsin Bankers Association. “We have heard from bankers who have manually processed these loans through the night and on weekends to ensure their customers get the help they need.” 

“In 2019, SBA loans for the year totaled $564 million. In just seven business days, Wisconsin businesses received SBA approval for over $7 billion,” she explained. 

“Keep in mind that PPP loans aren’t the only way Wisconsin’s banks are helping their customers,” said Oswald Poels. “They worked one-on-one with their customers to find solutions before PPP became available and they will continue to do so after the program is done.” 

There were and continue to be challenges with the program. Regulatory guidance is still being updated on a daily basis. The SBA portal has needed to be upgraded several times to keep up with the sheer volume of loan applications. 

The good news is Wisconsin’s banks entered this pandemic from a position of strength and are well-equipped to help their communities. 

The Wisconsin Bankers Association has created an online resource for small businesses and consumers located at www.wisbank.com/COVID-19

A table of the PPP loan amounts by state is below. You can also view the SBA report at  https://www.wisbank.com/media/567286/ppp-report-sba-41420.pdf 

State 

Number of Loans 

Dollar Amount 

TX 

88,434 

$21,776,306,479  

CA 

54,922 

$20,853,495,045  

FL 

52,021 

$12,656,107,018  

IL 

44,453 

$12,503,648,850  

NY 

40,975 

$11,737,950,918  

OH 

38,016 

$10,368,882,724  

PA 

36,604 

$9,910,549,957  

MO 

34,088 

$6,433,368,771  

MN 

33,819 

$7,633,395,870  

WI 

31,702 

$7,288,143,288  

GA 

29,423 

$6,725,718,213  

CO 

28,469 

$5,830,781,842  

MA 

27,315 

$7,073,245,593  

VA 

26,880 

$6,615,120,527  

OK 

26,451 

$4,009,914,991  

MI 

24,974 

$7,321,573,738  

NC 

23,786 

$5,729,549,254  

IN 

23,583 

$5,986,077,384  

IA 

22,295 

$3,748,993,223  

KS 

19,915 

$3,729,110,056  

AL 

19,244 

$3,819,600,518  

TN 

19,074 

$4,742,194,968  

WA 

18,906 

$4,928,845,742  

NE 

18,565 

$2,727,637,044  

KY 

17,216 

$3,336,402,794  

NJ 

17,187 

$5,897,533,934  

LA 

17,097 

$3,745,462,888  

AR 

14,803 

$2,166,563,254  

SC 

14,273 

$2,756,101,029  

MS 

14,209 

$1,921,783,598  

UT 

12,914 

$2,617,066,864  

MD 

11,937 

$3,756,206,258  

CT 

11,930 

$2,923,132,220  

AZ 

10,898 

$3,524,770,207  

ME 

10,889 

$1,710,424,025  

MT 

10,372 

$1,293,105,048  

OR 

9,508 

$2,427,776,445  

ID 

8,846 

$1,399,191,164  

HI 

8,426 

$1,626,051,108  

ND 

8,232 

$1,386,597,176  

SD 

7,986 

$1,156,576,164  

NH 

7,113 

$1,520,212,834  

NM 

5,365 

$1,103,753,677  

WV 

5,211 

$1,054,712,809  

VT 

4,886 

$853,707,598  

NV 

4,209 

$1,255,172,600  

RI 

4,110 

$875,591,033  

AK 

2,703 

$602,911,645  

DE 

1,974 

$590,422,870  

DC 

1,663 

$791,004,872  

PR 

1,001 

$319,308,946  

GU 

238 

$53,659,254  

VI 

68 

$13,116,530  

MP 

29 

$7,540,546  

AS 

1 

$389,500 

By, Eric Skrum

By, Eric Skrum

Late on Friday, April 10, the Treasury updated its FAQs to provide greater clarity around whether lenders need to wait for a separate authorization form to close PPP loans. Despite this being an abnormal practice for traditional SBA loans, the answer remains to close the loan without waiting for a separate SBA Authorization so long as you executed the PPP Lender Application Form. Based on the FAQ, repeated below, it is unclear if or when SBA will issue a separate authorization for PPP loans. Those who may have received an authorization earlier in the process from the system received an incorrect authorization. Below is Treasury’s FAQ (which is also reprinted in WBA’s FAQs): 

21. Question: Do lenders need a separate SBA Authorization document to issue PPP loans? 

Answer: No. A lender does not need a separate SBA Authorization for SBA to guarantee a PPP loan. However, lenders must have executed SBA Form 2484 (the Lender Application Form for the Paycheck Protection Program) to issue PPP loans and receive a loan number for each originated PPP loan. Lenders may include in their promissory notes for PPP loans any terms and conditions, including relating to amortization and disclosure, that are not inconsistent with Sections 1102 and 1106 of the CARES Act, the PPP Interim Final Rule and guidance, and SBA Form 2484. 

In addition, WBA has received many questions related to whether a bank may make a PPP loan to one of its directors since the program started. This has been a point of confusion from the start because there is such a prohibition in the traditional SBA SOP for 7a loans. In the Lender’s PPP application, the only certification the lender makes on that document is that the “Authorized Lender Official, nor such individual’s spouse or children, has a financial interest in the Applicant.” Certainly, you must adhere to this certification. In addition, the answer below has been provided to individual bankers who inquired through the 7a email “helpline” that is consistent with the broader language in the SBA SOP for regular 7a loans. WBA believes you should be following this guidance despite it not being published on Treasury or SBA’s websites. 

“Thank you for contacting the 7a Loan Guaranty Processing Center with your inquiry. 

Any Associates of Lender would need to apply at another financial institution. Per the federal regulations at 13 cfr 120.10: 

(1) An Associate of a Lender or CDC is: 
(i) An officer, director, key employee, or holder of 20 percent or more of the value of the Lender's or CDC's stock or debt instruments, or an agent involved in the loan process; 
(ii) Any entity in which one or more individuals referred to in paragraphs (1)(i) of this definition or a Close Relative of any such individual owns or controls at least 20 percent. 

Close Relative is a spouse; a parent; or a child or sibling, or the spouse of any such person. 

Per 13 cfr 120.140 (in part): 

Lenders, Intermediaries, and CDCs (in this section, collectively referred to as “Participants”), must act ethically and exhibit good character. Ethical indiscretion of an Associate of a Participant or a member of a CDC will be attributed to the Participant. A Participant must promptly notify SBA if it obtains information concerning the unethical behavior of an Associate. The following are examples of such unethical behavior. A Participant may not: 

(a) Self-deal;
(b) Have a real or apparent conflict of interest with a small business with which it is dealing (including any of its Associates or an Associate's Close Relatives) or SBA;
(c) Own an equity interest in a business that has received or is applying to receive SBA financing (during the term of the loan or within 6 months prior to the loan application);

(j) Fail to disclose to SBA whether the loan will: 
              (1) Reduce the exposure of a Participant or an Associate of a Participant in a position to sustain a loss;

(l) Engage in any activity which taints its objective judgment in evaluating the loan. 

If we can be of further assistance, please do not hesitate to contact us.” 

WBA will continue to keep members updated as the guidance for PPP loans continues to evolve.

By, Amber Seitz

Check out the latest edition of WBA's Education Calendar. While registration may not be open quite yet for programs in later 2021, this handy calendar can help you “save the date” for key programs and events you don’t want to miss, and also budget for them! This resource is available below as a PDF that you can download and share with your team.

By, Lori Kalscheuer