SBA Releases PPP Loans and Forgiveness FAQs and Interim Final Rule

Last week, the U.S. Small Business Administration (SBA) and U.S. Department of Treasury released new Paycheck Protection Plan (PPP) Frequently Asked Questions (FAQs) on PPP Loan Forgiveness. The 23 FAQs address the four main areas of concern for borrowers, as follows: ‍

• ‍General loan forgiveness - includes which loan application should be used for sole proprietors, independent contractors, or self-employed individuals, and when the borrower is required to make loan payments, if applicable. ‍
• Loan forgiveness payroll costs - include examples related to payment of costs incurred during the covered period but paid after the covered period, and whether borrowers are required to calculate payroll costs for partial pay periods.‍
• Loan forgiveness nonpayroll costs - include that nonpayroll costs incurred prior to the covered period are eligible for forgiveness, and that the Alternative Payroll Covered Period applies only to payroll costs, not nonpayroll costs. ‍
• Loan forgiveness reductions – include basis for excluding of reduction in FTE employees, and how borrowers calculate the reduction in their loan forgiveness amount arising from reductions in an employee’s salary or hourly wage.

This week, the PPP Loan Forgiveness FAQs were updated to include Economic Injury Disaster Loans (EIDL) FAQs, and the PPP FAQs, originally published in April, were updated to include two additional questions and answers. Also, the SBA issued an Interim Final Rule (IFR) for appeals of SBA loan review decisions under the PPP.

The EIDL FAQs cover the following:

How lenders will be able to confirm the amount of an EIDL advance through the SBA’s PPP Forgiveness Platform when the borrower has received both EIDL and PPP funds. The SBA will automatically deduct the EIDL from a PPP borrower’s loan forgiveness amount.

How lenders should handle any remaining balance due on a PPP Loan after the SBA remits the forgiveness amount to the lender. Lenders must notify the borrower of the amount remitted by SBA, when first payment will be due, and the maturity date.

If an EIDL advance is in excess of PPP loan amount, the lender must notify the borrower when the first payment will be due and maturity date.

To see the full listing of PPP Loan Forgiveness FAQs, click here.

The new PPP FAQs include:

• No. 50 - Establishes that the payment or nonpayment of fees of an agent or other third party is not material to the SBA’s guarantee of a PPP loan or to the SBA’s payment of fees to lenders.
• No. 51 - Permits vision and dental benefits payments to be included in the group healthcare benefits and insurance premiums that are eligible to be paid with PPP funds.

To see the full listing of PPP Loans FAQs, click here.

The IFR establishes procedures for prospective borrowers who want to appeal certain SBA loan decisions. The new Interim Final Rule (IFR) establishes review procedures for the PPP funding, including:

• The process for requesting a review of lender decision or an SBA decision that a borrower is ineligible for loan forgiveness.
• Documentation requirements, time limits, and a walkthrough of the processes. Oral hearings are permitted, but only in specific scenarios following a request or at a judge’s election.

While the SBA announced that its forgiveness portal opened on August 10, many lenders are still waiting for more guidance before accepting forgiveness applications.

To read the IFR in full, click here.