SBA Updates Guidance for Lenders on Revising Schedule C PPP Applications

The Small Business Administration over the weekend updated its Paycheck Protection Program FAQs and calculation guidance documents to reflect new options available to Schedule C-filing PPP applicants, including self-employed individuals, sole proprietors and independent contractors, to use gross income to calculate their loan amount. A newly added FAQ—question 66—covers options lenders have to help Schedule C borrowers who applied using the prior income calculation formula.

FAQ 66 provides details on options available to increase the borrower’s loan amount when lenders have not yet submitted loan guaranty forms, when the loan guaranty application has not yet been approved, when a loan has been approved but not disbursed and when a loan has been disbursed but the lender has not reported disbursement. However, “[i]f the lender has disbursed the loan and filed the related Form 1502 Report reporting disbursement of the loan, no changes can be made to the loan amount calculation,” SBA said. If a lender cancels a loan so that a borrower may make a different applicant, they must cancel the loan in E-Tran Servicing, not in SBA’s PPP platform—which may take up to two days to reflect the cancelation in E-Tran Servicing.

SBA also issued updated documents providing guidance on revenue reduction and maximum loan amount calculations for both first-draw and second-draw PPP loans.