September 25, 2020

Volume X, Number 269

September 25, 2020

Subscribe to Latest Legal News and Analysis

September 24, 2020

Subscribe to Latest Legal News and Analysis

September 23, 2020

Subscribe to Latest Legal News and Analysis

September 22, 2020

Subscribe to Latest Legal News and Analysis

SBA Issues New Guidance on 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.

© Polsinelli PC, Polsinelli LLP in CaliforniaNational Law Review, Volume X, Number 94

TRENDING LEGAL ANALYSIS


About this Author

Phil Feigen of the Polsinelli Law Firm Corporate Transaction Attorney, in Washington DC
Office Managing Partner

Phil Feigen brings a unique perspective to providing general corporate advice, as well as complex business counsel to clients in ever-changing regulatory environments.  For more than 20 years, Phil has been providing guidance with respect to Small Business Investment Companies and other Small Business Administrative regulations, federal and state banking laws and federal securities laws. 

Phil focuses on helping clients through the SBIC licensing process so that they may realize the benefits of the program and increase the amount of investment...

202-626-8330
Sara C. Ainsworth Securities & Corporate Finance Attorney Polsinelli Washington, D.C.
Associate

As an associate in the Securities & Corporate Finance practice, clients rely on Sara Ainsworth to work with Polsinelli’s team of attorneys to analyze each transaction matter to develop a strategic approach to representation based on the client’s immediate and long-term business and operational goals.

Working closely with seasoned Polsinelli attorneys in the Securities & Corporate Finance practice, Sara helps deliver a range of legal services during the life cycle of the client’s business—from selecting the appropriate choice of entity through to exit strategy.  Her practice focuses on:

  • Planning and executing capital-raising transactions
  • Drafting and negotiating key commercial agreements
  • Money service business and banking applications and registrations
  • Mergers and acquisitions and other strategic transactions
  • Fund formation, including regulated funds such as Small Business Investment Companies

Sara supports clients in a variety of industries, including the financial technology and mobility industries. Collaborating with attorneys from other related practices allows Sara and the entire attorney team to provide clients with comprehensive legal advice designed to minimize liability, maintain flexibility, and advance the client’s objectives.

202.772.8495