SBA Releases Details, Rules for PPP Relaunch

Community financial institutions will be able to submit loan applications for the Small Business Administration’s Paycheck Protection Program for at least two days before other lenders, SBA said late last night as it released interim final rules covering the pending relaunch of the PPP. However, SBA did not announce the date on which it will reopen its portal for applications for the $284 billion round.

The dedicated window for community financial institutions is part of SBA’s efforts to ensure businesses that most need PPP funds can get them. While noting that “PPP loans have been broadly distributed across diverse areas of the economy, with 27% of the funds going to low- and moderate-income communities, which is in proportion to their percentage of the population,” the law reauthorizing the PPP set aside specific pools of funds for first-time PPP borrowers, very small businesses and small businesses in LMI neighborhoods, as well as for loans from community financial institutions.

The first interim final rule amends the existing PPP rules to reflect changes made by Congress, including on fees, borrower eligibility, loan amounts, eligible expenses, reliance on borrower certifications and loan increases, as well as a new registration requirement for all lenders. However, “most of this document restates existing regulatory provisions to provide lenders and new PPP borrowers a single regulation to consult on borrower eligibility, lender eligibility and loan application and origination requirements, as well as general rules on increases and loan forgiveness for PPP loans,” SBA said.

Meanwhile, the second rule governs the second-draw loans now available for borrowers with 300 or fewer employees, that saw a 25% or greater revenue drop in 2020 compared to 2019 and that have used the full amount of their first-draw PPP loan. “Second-Draw PPP Loans are generally subject to the same terms, conditions and requirements as First-Draw PPP Loans,” SBA said. The maximum loan amount is $2 million or two and a half months’ worth of average payroll costs, whichever is less. The rule covers several calculations to determine eligibility and loan amounts.