The U.S. Treasury and the Small Business Administration, or SBA (also US Agencies) published an interim final rule that incorporates amendments, made by Economic Aid Act, to the requirements of the Paycheck Protection Program (PPP). For ease of borrower and lender reference, this interim final rule also consolidates the interim final rules (and important guidance) issued to date to govern borrower eligibility, lender eligibility, application process for PPP, and origination requirements for new PPP loans. The interim final rule also sets out general rules on loan increases and loan forgiveness. This rule is not intended to substantively alter or affect the PPP rules that were not amended by the Economic Aid Act. Unless otherwise specified in this interim final rule, the provisions of this interim final rule became effective from January 12, 2021. However, the comment period on this interim final rule ends on February 16, 2021.
The PPP is intended to provide economic relief to small businesses adversely impacted by COVID-19 pandemic. The Economic Aid Act reauthorizes lending under the PPP through March 31, 2021 and revises certain PPP requirements. The interim rule outlines the key provisions of the PPP related to eligibility of applicants for PPP loans, which lenders are authorized to make PPP loans, the process for making PPP loans, loan increases, and loan forgiveness, as revised by the Economic Aid Act. Additional rules related to the second-draw PPP loans will be published separately. While this interim final rule fully implements the Economic Aid Act's changes to loan forgiveness, SBA intends to issue a consolidated rule governing all aspects of loan forgiveness and loan review and to provide a single reference point for lenders and borrowers.
This interim final rule is intended to govern the new PPP loans made under the Economic Aid Act. The rule is also intended to govern applications for loan forgiveness on existing PPP loans where the loan forgiveness payment has not been remitted and should not be construed to alter or affect the requirements applicable to PPP loans closed prior to its enactment, unless the provisions apply retroactively consistent with specific applicability provisions of the Economic Aid Act as identified in this rule. In addition, in this interim final rule, the Treasury exercises its authority under section 1109 of the Coronavirus Aid, Relief, and Economic Security (CARES) Act to allow borrowers of first-draw PPP loans to use 2019 or 2020 as the base period to calculate their maximum loan amount. This interim final rule applies to loan applications, including requests for increases, and applications for loan forgiveness submitted under PPP, following an enactment of the Economic Aid Act. This interim final rule also applies to loan forgiveness applications submitted under PPP before enactment of the Economic Aid Act where SBA has not remitted the forgiveness payment.
Related Link: Federal Register Notice
Comment Due Date: February 16, 2021
Effective Date: January 12, 2021
Keywords: Americas, US, Banking, COVID-19, Paycheck Protection Program, Economic Aid Act, Credit Risk, Loan Origination, CARES Act, US Agencies
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