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Paycheck Protection Program Borrower and Lender Responsibilities

On May 22, 2020, the U.S. Small Business Administration (SBA) issued the Interim Final Rule on SBA Loan Review Procedures and Related Borrower and Lender Responsibilities.

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On May 22, 2020, the U.S. Small Business Administration (SBA) issued the Interim Final Rule on SBA Loan Review Procedures and Related Borrower and Lender Responsibilities.

On May 22, 2020, the U.S. Small Business Administration (SBA) issued the Interim Final Rule on SBA Loan Review Procedures and Related Borrower and Lender Responsibilities. The interim rule covers the following:

  1. SBA Reviews of Individual PPP Loans
  2. The Loan Forgiveness Process for Lenders
  3. Lender Fees

The complete Interim Final Rule on SBA Loan Review Procedures and Related Borrower and Lender Responsibilities is available on the U.S. Treasury website.  The key takeaways are:

SBA Reviews of Individual PPP Loans

  • SBA will review borrower eligibility, loan amounts and use of proceeds and loan forgiveness amount
  • For a PPP loan of any size, SBA may undertake a review at any time in SBA’s discretion (there is no reference to the $2 million safe-harbor noted in PPP Frequently Asked Question #39)
  • The borrower must retain PPP documentation in its files for six years after the date the loan is forgiven or repaid in full (this essentially creates a six-year window to review an applicant’s loan)
  • PPP borrowers will be able to respond to SBA’s questions during the review, either through the PPP lender or directly to the SBA
  • PPP borrowers that are deemed ineligible for a PPP loan will not be eligible for forgiveness, may need to repay the outstanding PPP loan balance and may be subject to other remedies available to the SBA
  • There will be an appeal process for PPP borrowers which have been deemed ineligible (a separate interim final rule addressing this process will be issued)

The Loan Forgiveness Process for Lenders 

  • PPP Lenders must confirm:
    • receipt of the documentation borrowers must submit to aid in verifying payroll and nonpayroll costs
    • the borrower’s calculations on the borrower’s PPP Loan Forgiveness Application
  • An accurate calculation of the loan forgiveness amount is the responsibility of the borrower
  • Lenders are expected to perform a good-faith review of the borrower’s calculations and supporting documents concerning amounts eligible for loan forgiveness
  • The lender must issue a decision to SBA on a loan forgiveness application not later than 60 days after receipt of a complete loan forgiveness application from the borrower
  • SBA will, subject to any SBA review of the loan or loan application, remit the appropriate forgiveness amount to the lender, no later than 90 days after the lender issues its decision to SBA

All PPP loan borrowers (not just borrowers and affiliated borrowers with loans in excess of $2 million) should be prepared to support their need of a PPP loan with documentation. All PPP loan borrowers should consult with their legal counsel on what satisfies the ‘current economic uncertainty which makes the loan request necessary to support the ongoing operations’ requirement.  This documentation will need to be maintained for six years.

Calculating Loan Forgiveness 

All PPP Loan borrowers and lenders should obtain a complete understanding of the all the calculation included in the PPP Loan Forgiveness Application to ensure all calculations submitted are accurate and are in accordance with the various and ever changing guidance issued by the SBA. Unfortunately, the PPP Loan Forgiveness Application calculations are extremely complex.  To help navigate this complexity, we have developed the blumshapiro PPP Loan Forgiveness Toolkit & Calculator.  We will continue to update the blumshapiro PPP Loan Forgiveness Toolkit & Calculator as additional guidance becomes available. As long as the blumshapiro PPP Loan Forgiveness Toolkit & Calculator is downloaded via the blumshapiro.com, all downloaders will get notified of any changes to the PPP Loan Forgiveness Toolkit & Calculator.

PPP Loan Forgiveness Assistance

blum has been on the forefront of interpreting PPP guidance and providing trusted resources for clients to keep them apprised of constant changes, and providing the most up-to-date information to assist in calculating loan forgiveness. Our team is working with clients to assist them with navigating through compliance requirements of the loan forgiveness program, to ensure forgiveness is received, help expedite the loan forgiveness process and provide a reliable and trusted source of information. Learn more about our loan forgiveness services >>

PPP Assistance Sell Sheet


For more information on our loan forgiveness services, please contact us here:


 

Disclaimer: Any written tax content, comments, or advice contained in this article is limited to the matters specifically set forth herein. Such content, comments, or advice may be based on tax statutes, regulations, and administrative and judicial interpretations thereof and we have no obligation to update any content, comments or advice for retroactive or prospective changes to such authorities. This communication is not intended to address the potential application of penalties and interest, for which the taxpayer is responsible, that may be imposed for non-compliance with tax law.

Disclaimer:  The contents of this resource are for general informational purposes only. While every effort has been made to ensure its accuracy, the information is provided “as is” and no representations are made that the content is error-free. We have no obligation to update any content, comments or other information for retroactive or prospective interpretations or guidance provided by regulators, financial institutions or others. The information is not intended to constitute legal advice or replace the advice of a qualified professional. There are areas of the CARES Act where additional clarification from the Treasury Department and the SBA is needed. Your judgment and interpretation of the act may be needed. Users should consult with their legal counsel and representatives of the lending institution regarding the proper completion of their application and supporting documentation.

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