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The US Small Business Administration (“SBA”) has now formalized certain borrower-friendly changes to the Paycheck Protection Program (“PPP”) provided for by the PPP Flexibility Act. A new Interim Final Rule (“IFR”) follows an informal joint press release on June 8, 2020 by the Department of the Treasury and SBA that previewed program changes. The SBA also issued a revised PPP Borrower Application Form and a revised PPP Lender Application Form conforming certain certifications to the program revisions and making other changes. Revised forgiveness application forms and instructions have not yet been released, but are anticipated in the near future.

Continue Reading SBA Issues New Rule, Revised Borrower/Lender Application Forms Implementing PPP Flexibility Act

While the second round of Paycheck Protection Program (“PPP”) funding remains available for new applicants, the first round is about to enter a new phase—loan forgiveness. Under the PPP, up to the full amount of the loan may be forgiven if the borrower spends proceeds on eligible payroll, mortgage, rent, and utilities expenses in the eight weeks following loan origination (subject to certain limitations, including that not more than 25% of forgiveness may be based on eligible non-payroll expenses). Forgiveness will be reduced for employer reductions in headcount and for certain reductions in salaries/wages in excess of 25% for any employee making less than $100,000 on an annualized basis during the eight-week period as compared with pre-COVID-19 conditions. To facilitate the forgiveness process, the SBA has now issued a PPP Forgiveness Application (SBA Form 3508). Borrowers that plan to seek forgiveness should carefully review the form and its instructions in advance of submission to their lenders or current servicers.

Continue Reading US SBA Paycheck Protection Program (PPP) Forgiveness Application

The Federal Reserve’s Paycheck Protection Program Liquidity Facility (“PPPLF”) is now available to non-bank PPP lenders to finance Paycheck Protection Program (“PPP”) loans that they originated or purchased.  While the PPPLF was previously only available to depository institutions to finance PPP loans that they originated, the Federal Reserve revised its eligibility criteria on April 30,

Non-bank lenders providing struggling small businesses a lifeline through forgivable Paycheck Protection Program (“PPP”) loans may soon have access to the Federal Reserve’s Paycheck Protection Program Liquidity Facility (“PPPLF”) to support their lending operations. The Federal Reserve issued a term sheet for the PPPLF on April 9, 2020, indicating its intention to provide capital to

On April 28, 2020, the SBA issued a new Interim Final Rule (“IFR”) addressing certain requirements imposed on lenders under the Paycheck Protection Program (“PPP”). The IFR clarifies how and when PPP loans must be disbursed, sets expectations regarding the reporting of PPP loans to the SBA, and identifies certain circumstances under which a PPP lender will not be entitled to its processing fee as origination compensation for PPP loans. The rule is effective immediately, though requirements related to loan reporting contemplate the SBA’s issuance of a form that is not yet available.

First, the IFR clarifies several aspects of PPP loan disbursement requirements. The IFR provides that PPP loans are single disbursement loans. It also provides that the 10-day disbursement window within which a lender must disburse loan funds normally runs from the date the lender receives a SBA loan number, but: (i) for loans not already fully disbursed, the 10-day window runs from April 28th and the 8-week forgiveness window runs from the date of the first disbursement; and (ii) the lender is not responsible for delays in disbursement attributable to a borrower’s failure to timely provide loan documentation (e.g., executing a promissory note), though loan approvals must be cancelled if required loan documentation is not submitted within 20 calendar days after approval. Moreover, it provides that amounts included in a PPP loan representing refinancing of a SBA Economic Injury Disaster Loan (“EIDL”) must be disbursed directly to the SBA, rather than to the borrower.


Continue Reading SBA Issues New PPP Rule Addressing Disbursement Requirements, Loan Reporting, and Lender Compensation

After $349 billion in paycheck protection program (“PPP”) loans were exhausted in just 13 days, the U.S. Senate today enacted legislation to provide additional funding for the program, including at least $60 billion set aside for smaller banks and lenders. The legislation does not alter the general eligibility, affiliation, forgiveness, repayment and loan requirements; but merely provides additional funding.

Specifically, the legislation increases PPP funding by $310 billion, including $250 billion accessible to all eligible lenders and borrowers, $30 billion set aside for loans made by Insured Depository Institutions and Credit Unions with consolidated assets between $10-$50 billion, and an additional $30 billion set aside for loans made by Community Financial Institutions, Small Insured Depository Institutions and Credit Unions with consolidated assets under $10 billion.


Continue Reading US Senate Enacts Legislation to Extend the Paycheck Protection Program

The Small Business Administration (SBA) released an interim final rule on the evening of April 2, 2020, outlining key provisions of the SBA’s Paycheck Protection Program (PPP) and the provisions of the CARES Act relating to loan forgiveness. The rule is effective immediately.

Continue reading on Mayer Brown’s Retained Interest blog.

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If you

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) was signed into law.

Among other things, the CARES Act creates the “Paycheck Protection Program,” which provides up to $349 billion to expand the Small Business Administration’s (SBA’s) existing 7(a) loan program to support new loan guarantees and subsidies.

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