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.