The Small Business Administration (SBA) has provided an update to indicate SBA is receiving a significant number of questions from lenders regarding the revised rules on First Draw PPP loans, First Draw Loan Increases, Second Draw PPP loans, and streamlined PPP Loan Forgiveness terms. SBA recognizes that businesses have undergone many changes since the beginning of the COVID-19 pandemic to enable them to maintain operations and continue employing America’s workers. These changes may include entity size, location or staffing, methods of operation, organizational structure, and changes in ownership. SBA is working to identify these potential program and system updates.
Lenders should note that if a First Draw PPP Loan is still under review, there may be a delay in getting a Second Draw PPP Loan number. To clarify, SBA may review any PPP loan, of any size, at any time, if appropriate. If a borrower’s First Draw PPP Loan is under review by SBA for any reason, including if information in SBA’s possession indicates that the borrower may have been ineligible for the First Draw PPP Loan it received or for the loan amount it received, the lender will receive notification from SBA when the lender submits an application for a guaranty of a Second Draw PPP Loan, and will not receive an SBA loan number until the issue related to the First Draw PPP Loan is resolved. SBA will work to improve the information provided to lenders about the issues and update lenders as to how they can help clear issues quickly.
Also, Second Draw loan applications require an SBA loan number used for the First Draw PPP loan that was originated in 2020. Lenders should verify that the PPP applicant has the correct SBA loan number, and the correct Borrower TIN to assure that the portal can match up the two loans.
SBA continues to provide additional information and guidance to assist lenders with the PPP as amended by the Economic Aid Act:
• Second Draw Paycheck Protection Program (PPP) Loans: How to Calculate Revenue Reduction and Maximum Loan Amounts Including What Documentation to Provide (Released 1/19/2021) provides detailed information regarding calculating and documenting the mandatory 25% reduction in revenues and maximum loan amount.
- PPP: How to Calculate Maximum Loan Amounts for First Draw Loans and What Documents to Provide (sba.gov) (released 1/17/2021) provides updated guidance, by business type, regarding calculating and documenting payroll costs in order to determine the maximum amount of a First Draw loan.
- Interim Final Rule: Loan Forgiveness Requirements and Loan Review Procedures as Amended by Economic Aid Act (01-19-21)
- PPP Loan Forgiveness Application Form 3508 (Revised 1/19/21)
- PPP Loan Forgiveness Application Form 3508EZ (Revised 1/19/21)
- PPP Loan Forgiveness Application Form 3508S (Revised 1/19/21)
- Borrower’s Disclosure of Certain Controlling Interests Form 3508D (Released 1/19/2021). The 3508-D only needs to be completed by borrowers that received a PPP loan before December 27, 2020 and were directly or indirectly controlled by certain government officials (President, VP, Member of Congress, Head of Executive Department and their spouses) at the time the loan was made.
For more information and updates, visit SBA.gov or Treasury.gov/CARES
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