SBA Issues FAQs on Revenue Reduction, Max Loan Amount Calculations for Second-Draw PPP Loans

With the Paycheck Protection Program portal reopening for all lenders this morning, the Small Business Administration today issued a set of frequently asked questions that address how to calculate revenue reduction and maximum loan amounts for second-draw PPP loans, as well as the documents borrowers must provide to back up these calculations. Second-draw loans are available for borrowers with 300 or fewer employees that experienced a 25% or greater revenue drop in 2020 compared to 2019 and that have used or intend to use the full amount of their first-draw PPP loan by the time they receive their second-draw loan.

“Lenders may rely on this guidance as SBA’s interpretations of the CARES Act, the Economic Aid Act and the Paycheck Protection Program interim final rules,” SBA said. “The government will not challenge lender PPP actions that conform to this guidance and to the PPP interim final rules and any subsequent rulemaking in effect at the time the action is taken.”

SBA also issued a reminder regarding borrowers who have applied for second-draw loans and who currently have loans under review by SBA, or SBA has determined that the borrower may not have been eligible for a first-draw loan. In these cases, SBA said that the lender will not receive an SBA loan number for a borrower’s second-draw loan until the issue related to the first-draw loan is resolved. SBA said it will “resolve issues related to unresolved borrowers expeditiously.”