The Small Business Administration last night issued a procedural notice to lenders regarding the extension of the Paycheck Protection Program. Pursuant to the PPP Extension Act of 2021, SBA said that it would shut down its PPP platform to new PPP loan guaranty applications at 12 a.m. EDT on June 1. SBA will then have an additional month to process any pending applications, before shutting down processing on 12 a.m. EDT on July 1.
The SBA this week also issued an update to its frequently asked questions on the PPP. The new answer provides clarity regarding when an applicant or owner is no longer considered to be “presently involved in any bankruptcy” for PPP loan eligibility purposes.
Chapter 7 bankruptcy filers will no longer be considered “presently involved in any bankruptcy,” after the bankruptcy court enters a discharge order in the case. For Chapter 11, 12, or 13 bankruptcy filers, the bankruptcy court must enter an order confirming the plan in the case. For any type of bankruptcy, if the bankruptcy court has entered an order dismissing the case, applicants or owners will no longer be considered “presently involved in any bankruptcy” for purposes of the PPP. SBA noted that “the discharge order, the order confirming the plan or the order of dismissal, whichever is applicable, must be entered before the date of the PPP loan application.”