May 27, 2020
By Caity Witucki
Contributing Editor, C-Suite Wednesday
C-Suite Wednesday — Interim Final Rule Issued on PPP Lender Responsibilities
On May 22, 2020 the Small Business Administration and Treasury Department issued an interim final rule on Paycheck Protection Program (PPP) procedures. This interim final rule is intended to inform borrowers and lenders of the SBA’s process for reviewing PPP loan applications and loan forgiveness applications.
Participating PPP lenders should take note of the following guidance:
- The SBA may review a loan if the documentation submitted to SBA indicates that the borrower may be ineligible for a PPP loan or loan forgiveness.
- Lenders must comply with applicable SBA requirements for record retention.
- If the SBA suspects a borrower is ineligible for loan forgiveness, the lender must contact the borrower in writing to request additional information and then provide the borrower’s additional information to SBA for reconsideration.
- If the borrower is ineligible for forgiveness, the lender will be directed to deny the loan forgiveness application in whole or in part, as deemed appropriate by the SBA.
- Lenders must perform a good-faith review of the borrower’s calculations and supporting documents concerning amounts eligible for loan forgiveness.
- Lenders must issue a decision on loan forgiveness applications within 60 days. When the lender issues its decision to the SBA, it must include the Forgiveness Calculation Form and PPP Schedule A.
- If the SBA undertakes a review, the lender must notify the borrower within five business days and provide the SBA with the borrower’s application form and loan forgiveness application, a signed transcript of account, and a copy of the executed note.
- If SBA determines that the borrower was ineligible for a PPP loan, the lender is not eligible for a processing fee.
The SBA is expected to issue additional guidance on submitting review documentation in a future notice.