Paycheck Protection Program As Amended By Economic Aid Act

On January 6, 2021, the Small Business Administration issued an Interim Final Rule on the Paycheck Protection Program as Amended by Economic Aid Act.  A link to the Interim Final Rule is located here:

The Interim Final Rule includes information on the following topics:

  • What Do Borrowers Need to Know and Do
    • What businesses, organizations, and individuals are eligible
    • What businesses, organizations, and individuals are ineligible
    • Affiliation rules generally
    • How much can be borrowed
    • What is the interest rate on a PPP loan
    • What will be the maturity date on a PPP loan
    • Can a borrower apply for more than one First Draw PPP Loan
    • Can a borrower use e-signatures or e-consents if a borrower has multiple owners
    • When will I have to begin paying principal and interest on my PPP loan
    • What forms does a borrower need and how does a borrower submit an application for a PPP loan
    • How can PPP loans be used
    • What certifications need to be made
    • Limited safe harbor with respect to certification concerning need for PPP loan request
    • Can my PPP loan be forgiven in whole or in part
    • Do independent contractors count as employees for purposes of PPP loan forgiveness
    • For loans made prior to December 27, 2020, what additional documentation must a borrower submit when the President of the United States, Vice President of the United States, the head of an Executive department, or a Member of Congress, or the spouse of any of the preceding, directly or indirectly holds a controlling interest in the borrower
    • What Do Lenders Need to Know and Do
      • Who is eligible to make PPP loans
      • Do lenders have to register in to make PPP loans
      • What do lenders have to do in terms of loan underwriting
      • Can lenders rely on borrower documentation for loan forgiveness
      • What fees will lenders be paid
      • Can PPP loans be sold into the secondary market
      • Do the requirements for loan pledges under 13 CFR 120.434 apply to PPP loans pledged for borrowings from a Federal Reserve Bank (FRB) or advances by a Federal Home Loan Bank (FHLB)
      • Are lenders required to use a promissory note provided by SBA or may they use their own
      • Are lenders required to use a separate SBA Authorization document to issue PPP loans
      • By when must a lender electronically submit an SBA Form 1502 indicating that PPP loan funds have been disbursed
      • How do lenders report disbursements on PPP loans that are approved for loan increases due to the Economic Aid Act
      • What Do Both Borrowers and Lenders Need to Know and Do
        • What are the loan terms and conditions
        • Do lenders have to apply the “credit elsewhere test”
        • Are there any fee waivers
        • Who pays the fee to an agent who provides assistance in connection with a PPP loan
        • Can a borrower take multiple draws from a PPP loan and thereby delay the start of the covered period
        • If a partnership received a PPP loan that did not include any compensation for its partners, can the loan amount be increased to include partner compensation
        • If a seasonal employer received a PPP loan before December 27, 2020, can the loan amount be increased based on a revised calculation of the maximum loan amount
        • Which other PPP borrowers can reapply or request an increase in their PPP loan amount
        • If a borrower’s PPP loan has already been fully disbursed, can the lender make an additional disbursement for the increased loan proceeds
        • Are recipients of PPP loans entitled to exemptions on the grounds provided in Federal nondiscrimination laws for sex-specific admissions practices, sex-specific domestic violence shelters, coreligionist housing, or Indian tribal preferences in connection with adoption or foster care practices

The Attorneys at Levene Gouldin & Thompson, LLP are available to provide advice and counsel concerning these new statutory obligations and other matters related to COVID-19.

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