<img height="1" width="1" style="display:none" src="https://www.facebook.com/tr?id=1018706268302959&amp;ev=PageView&amp;noscript=1">
((o
Knowledge • News • Insights
 o))
In Partnership With

Industry Advocacy Wins Improvements in SBA Paycheck Protection Program

Michigan Business Network
April 3, 2020 11:00 AM

Michigan Bankers Association

The Small Business Administration (SBA) issued an interim final rule that provides additional implementation guidelines and requirements for its Paycheck Protection Program (PPP) to aid small businesses hit hard by the COVID-19 crisis. In the new guidance, SBA makes significant changes from its original plan, including raising the fixed interest rate on loans made under the program from 0.5% to 1% in response to feedback that the terms could prevent community banks from participating in the program.

Since the CARES Act was passed last week, ABA has engaged directly and extensively with Treasury and SBA, sharing feedback from the state associations and a broad range of bankers to ensure the PPP works as designed and that all banks can participate efficiently. Feedback from Michigan bankers, shared with ABA President and CEO on Wednesday morning during our daily CEO call was critical. Points you raised there and throughout the week were shared by our leadership in daily afternoon conference calls with executives from state banking associations around the country.

The new rule provides greater clarity on several issues. For example, it specifies underwriting expectations, which are limited to the application form and the certifications in it, the borrower’s payroll documentation and applicable Bank Secrecy Act requirements. Lenders may rely on borrower documentation for loan forgiveness, providing greater protection for lenders should borrowers misrepresent information in their application.

“The lender does not need to conduct any verification if the borrower submits documentation supporting its request for loan forgiveness and attests that it has accurately verified the payments for eligible costs,” the rule said. “The Administrator will hold harmless any lender that relies on such borrower documents and attestation from a borrower.”

After seven weeks, lenders may request that SBA purchase the expected forgiveness amount of PPP loans; these requests may be submitted in advance, and SBA will purchase the expected forgiveness amount of the loan within 15 days after it receives a complete report.

Banks already certified as 7(a) lenders may begin approving loan applications with SBA delegated authority tomorrow. The rule said that all banks not currently in troubled condition will be “automatically qualified” to make loans with delegated authority once they submit SBA Form 3506, which is expected to be posted on the SBA and Treasury websites tonight, along with the official application form and the form lenders must submit to receive the 7(a) guaranty.

The guidance in the rule complements other PPP details released Tuesday, including the processing fees SBA will pay to lenders, SBA’s 100% guaranty of PPP loans and the eligibility of the loans to be sold into the secondary market. Authorized by the CARES Act and administered under the SBA 7(a) loan program as part of the federal response to the coronavirus pandemic, the PPP makes up to $349 billion in forgivable loans available to small businesses that use the funds to cover payroll costs and certain other operating expenses.

Read the SBA interim final rule.

View more information at treasury.gov/cares.

Learn more about banks' response to COVID-19.

More Information:

  • The buttons below takes you to updated information and significantly more Q & A's from our task force.
  • As outlined during our statewide call on Wednesday, included as well is a sample payroll analysis calculator fully customizable for individual bank use.
  • *Please note all information is as is available now. Final determinations from SBA expected this week.
    • Non-SBA Lenders: We believe that the SBA plans to release a streamlined application form that non-SBA lenders can use to become an approved PPP lender.
    • Additional Guidance: We expect SBA to provide additional guidance sometime today or tomorrow to help clarify many of the myriad of questions bankers are facing regarding this program.
    • Borrower Information EIDL/PPP: Borrowers may only take dollars from one of these programs.

More clarity expected when additional guidance is issued. The MBA and the CBM task force will share information the moment we are aware.

For more information, contact Alex Morris, amorris@mibankers.com, Advocacy Manager.

Visit mibankers.com for the latest information on SBA/PPP program
CARES ACT SBA/PPP Loan Information
SAMPLE Payroll Analysis Calculator
  • MBassoc

Michigan Business Network is an online broadcasting company that provides knowledge, news, and insights into Michigan’s businesses, industries, and economy.