CARES Act Credit Union-Specific Information & Resources
On March 27, President Trump signed into law a $2 trillion stimulus bill, the CARES Act, to provide relief during the COVID-19 pandemic. The legislation was amended to include credit unions in several provisions that, through drafting oversights, had previously only included banks and other lenders and are meant to support struggling small businesses and protect consumer finances.
CARES Act Credit Union Provisions
Provides that credit unions are eligible to participate in the paycheck protection program, an expanded Small Business Administration 7(a) program, which would allow for 100% federally guaranteed loans to small businesses so those businesses can continue to cover their payroll, mortgage/rent costs, insurance premiums and other debt obligations
- Reestablishes the Transaction Account Guarantee Program, in which the government guarantees certain noninterest-bearing transaction accounts through the FDIC or NCUSIF;
- Allows credit unions to participate in troubled debt restructuring, permitting credit unions to further modify existing loans;
- Expands NCUA’s Central Liquidity Facility, which serves as a liquidity lender to credit unions experiencing unusual or unexpected liquidity shortfalls.
- Includes credit unions in a current expected credit loss (CECL) delay for those entities currently required to comply with CECL.
MCUL is carefully analyzing the business loan provisions of the legislation, to assist credit unions in leveraging these to the best extent possible. We will be seeking input from an advisory group of credit unions and CUSOs to facilitate this and help credit unions lead out on messaging to business-members.
CUNA/League System and the CARES Act
With CUNA and state leagues’ help, including the MCUL’s letter to our entire delegation credit unions have been included in key sections of the bill.
- Section 1109 – we were able to add language making credit unions eligible to participate in the paycheck protection program.
- Section 4008 – reestablishment of the Transaction Account Guarantee Program
- Section 4013 – We were able to get credit unions included in the troubled debt restructuring language.
- Section 4014 – We were able to get credit unions included in the CECL delay. (although please note this section is only applicable to entities currently required to comply with CECL… it isn’t the longer delay we continue to seek.)
- Section 4016 – Working with NCUA, we were able to include language expanding the Central Liquidity Facility.
The CARES Act (Phase 3 of the Stimulus) includes:
- Cash payments of up to $1,200 for individuals, $2,400 for married couples and $500 per child, reduced if an individual makes more than $75k or a couple makes more than $150k.
- A $350b fund for small businesses to mitigate layoffs and support payroll.
- $500b available to the Treasury to make loans, loan guarantees and investments to or in industries damaged by the pandemic.
- Requires group health plans and insurance providers to cover without cost-sharing any coronavirus preventive services.
- An employee retention tax credit.
- $240b in health care relief.
- $75b in aid for hospitals.
- $20b for emergency public transportation relief.
- $10b for airport relief.
- $4.5b for the CDC and Prevention.
- $50b I relief to airlines for loans, grants and $8b or cargo carriers.
- $17b for unspecified businesses critical to maintaining national security.
- Strengthened unemployment insurance, which could potentially add $600 per week for up to four months on top of what a state would give beneficiaries.