As expected, the Small Business Administration and Treasury Department late last night released an interim final rule to reflect changes made by H.R. 7010, the Paycheck Protection Program Flexibility Act. SBA also published updated, streamlined application forms for borrowers and lenders to use for loans made on or after June 5, 2020.
The interim final rule codifies several changes to the program. Specifically, it:
- Confirms that borrowers that use less than 60% of their PPP loan amount for payroll costs during the forgiveness covered period will still be eligible for partial loan forgiveness.
- Extends the end date of the “covered period” for a PPP loan from June 30, 2020 to Dec. 31, 2020.
- Provides a five-year maturity for loans made on or after June 5, 2020, and provides an option for loans made prior to that date to extend maturity from two years to five years at the mutual agreement of the borrower and lender.
- Extends the loan forgiveness period from eight weeks to 24 weeks. (For loans made prior to June 5, 2020, borrowers may opt to keep the forgiveness period at eight weeks.)
- Clarifies that if a borrower submits its forgiveness application within 10 months of the end of the loan forgiveness period, the borrower will not have to make any payments on the loan before the date SBA remits the forgiven amount to the lender.
- Reiterates that the last day a lender can obtain an SBA loan number for a PPP loan is June 30, 2020.
SBA signaled that it will issue additional revisions to its interim final rules on loan forgiveness and loan review procedures to address changes H.R. 7010 made to the PPP loan forgiveness requirements, as well as guidance on advance purchases of PPP loans.