March 25,  2020

Washington, DC — Representative John Curtis (R-UT) advocated for small businesses after hearing from many small businesses in Utah that heavy-handed federal regulations are forbidding banks from being flexible with small business loans, even if the small business is struggling due to COVID-19.

The Congressman will be introducing the Small-Business-Community Banker COVID-19 Relief Act, legislation to suspend these two regulations for any depository institution and small business substantially affected by COVID–19. He also sent a letter to the Acting Director of the Financial Accounting Standards Board about these concerns.

“In many cases, small and medium-sized business owners have been working with community bankers for years and have developed a mutual trust. Bankers in our state want to assist the small and medium-sized businesses in our community who are struggling to make payments on their loans due to the impact of COVID-19 but federal regulations are preventing them from being flexible with small business loan repayment,” said Curtis. “My bill, the “Small Business-Community Banker COVID-19 Relief Act” would allow small and medium-sized businesses and community banks and credit unions to work together without heavy-handed federal government intervention. In addition to the bill, I have sent a letter to the Financial Accounting Standards Board Acting Director raising the issue.”


The bill and letter address two regulations that have been brought to Rep. Curtis’ attention by business owners in Utah. In response to banks’ challenges during and after the 2008 financial crisis, in June 2016, FASB promulgated a new credit loss standard— Current Expected Credit Loss (CECL). It requires banks to shore up additional capital to counter non-performing loans. Because of COVID-19, some small business loans are going to be non-performing but community banks will not have the capital to counter non-performing loans.

Banks also have to disclose poorly performing loans in a new category under troubled debt restructuring (TDR). Because of COVID-19, some small business loans are going to be non-performing, but that does not necessarily make them impaired. Suspending this regulation would allow banks to have more flexibility to work with their borrowers and provide loan modifications without getting dinged by their regulators.

Full text of the bill is available [HERE].  

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