January 11, 2021

Caity Roach
Editor

What You Need to Know About the New SBA Guidance as of January 11, 2021

1. Changes to PPP
On January 6, 2021, the SBA released two IFRs with comprehensive guidance on First Draw and Second Draw PPP loans.

2. PPP Opening Dates
Community financial institutions will be able to make First Draw PPP Loans on Monday, January 11, and Second Draw PPP Loans on Wednesday, January 13.  PPP will open to other participating lenders shortly thereafter. SBA has not yet announced the opening date for non-community financial institutions.

3. Definition of Community Financial Institution
The SBA defines a Community Financial Institution as a Community Development Financial Institution (CDFI), a Minority Depository Institution (MDI), a Community Development Corporation (CDC), or an SBA Microlender Intermediary.

4. SBA and Treasury Release PPP First Draw Application Forms
Form 2483 “First Draw Borrower Application” and Form 2484 “First Draw Lender Guaranty Application” were updated on January 8, 2021.

5. SBA and Treasury Release PPP Second Draw Application Forms
Form 2483-SD “Second Draw Borrower Application” and Form 2484-SD “Second Draw Lender Guaranty Application” were released on January 8, 2021. Generally, SBA lenders eligible to make first draw PPP loans are also eligible for second draw PPP loans. Borrowers seeking a second draw PPP loan must have already used or plan on using their first draw PPP loan and must demonstrate a 25% reduction in gross receipts during any quarter in 2020 as compared to the same quarter in 2019.

6. SBA Issues Technical Guidance Regarding the Implementation of the PPP
The SBA has issued a PPP Origination Portal User Guide for new PPP lenders. The Powerpoint guide walks leaders through the proper way of submitting PPP applications on the origination platform and provides guidance on monitoring origination. 

7. SBA Modifies Forms 3506, 3507, and 750 CA (for PPP only)
The SBA has modified Forms 3506, 3507, and 750 CA by extending the termination date in Section 8 or Section 19 to “April 1, 2021,” modifying the statutory references in the forms to reflect the newly enacted Economic Aid Act, and modifying the forms to require the fixed rate of interest on PPP Loans to be calculated on a non-compounding, non-adjustable basis and conforms the forms to existing PPP eligibility requirements. The new forms are available on the SBA website.

8. SBA Releases Guidance on EIDL Advance Deduction Repeal 
SBA will no longer deduct EIDL Advances from forgiveness payments remitted to PPP lenders. For those loans where SBA remitted a forgiveness payment to a PPP lender that was reduced by an EIDL Advance, SBA will automatically remit a reconciliation payment to the PPP lender for the previously-deducted EIDL Advance amount, plus interest through the remittance date. PPP lenders are not required to request remittance of the reconciliation payment.

9. Section 1112 Payments Coming Soon
The SBA Administrator has announced that the SBA will be issuing guidance on debt relief payments soon. “The SBA is determining how much additional debt relief assistance can be provided to SBA borrowers with the newly issued Congressional appropriation,” says the press release. “Debt Relief guidance will soon be posted on the SBA website.”

10. Simplified PPP Forgiveness Form and Guidance Coming Soon
The Economic Aid Act requires the SBA to create a one-page forgiveness application for PPP loans less than $150,000. The Application is expected to be released soon. Although 13 CFR Parts 113, 120, and 121 fully implement the Economic Aid Act’s changes to loan forgiveness, the SBA also intends to issue a consolidated rule governing all aspects of loan forgiveness.

For more comprehensive guidance on SBA lending under the new Economic Aid Act, sign up for Coleman’s Everything Lenders Need to Know about First and Second Draw PPP Lending webinar which will be held on Tuesday, January 12, 2021.