SBA Issues New Guidance on Paycheck Protection Program
Friday, April 3, 2020
SBA PPP Paycheck Protection Program

The SBA issued new guidance on the Paycheck Protection Program on April 2, 2020. Below is a summary of changes:

  • What are the lending criteria? Lenders will rely on borrower certifications to determine borrow eligibility.

  • Affiliation Rules: No further guidance was provided. However, the SBA stated it intends to issues new guidance on this issue promptly. We will keep you informed.

  • Interest rate: 1% (prior guidance said 0.5%), with a maturity of 2 years.

  • Ineligible businesses: As defined in 13 CFR §120.110 and the Standard Operating Procedure:

    • Financial businesses primarily engaged in the business of lending, such as banks, finance companies, and factors (pawn shops, although engaged in lending, may qualify in some circumstances);

    • Passive businesses owned by developers and landlords that do not actively use or occupy the assets acquired or improved with the loan proceeds (except Eligible Passive Companies under § 120.111);

    • Life insurance companies;

    • Businesses located in a foreign country (businesses in the U.S. owned by aliens may qualify);

    • Pyramid sale distribution plans;

    • Businesses deriving more than one-third of gross annual revenue from legal gambling activities;

    • Businesses engaged in any illegal activity;

    • Private clubs and businesses which limit the number of memberships for reasons other than capacity;

    • Government-owned entities (except for businesses owned or controlled by a Native American tribe);

    • Businesses principally engaged in teaching, instructing, counseling or indoctrinating religion or religious beliefs, whether in a religious or secular setting;

    • Loan packagers earning more than one third of their gross annual revenue from packaging SBA loans;

    • Businesses with an Associate who is incarcerated, on probation, on parole, or has been indicted for a felony or a crime of moral turpitude;

    • Businesses in which the Lender or CDC, or any of its Associates owns an equity interest;

    • Businesses which:

      • Present live performances of a prurient sexual nature; or

      • Derive directly or indirectly more than de minimis gross revenue through the sale of products or services, or the presentation of any depictions or displays, of a prurient sexual nature;

  • Will interest accrue during the 6 month deferment? Yes, it will.

  • What forms do I need to submit? SBA Form 2483 and payroll documentation.

  • Refinancing an SBA Disaster Loan: For a disaster loan made between January 31, 2020 and April 3, 2020 must be refinanced as a PPP loan if it was used for payroll costs.


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