On May 21, 2020, the US Small Business Administration (“SBA”) issued a notice advising lenders of how they can collect loan processing fees for qualifying loans issued under the Paycheck Protection Program (“PPP “).
In accordance with the CARES Act and Interim Rule, issued by the SBA on April 2, 2020, the SBA will pay a fee to lenders for processing eligible PPP loans at the following rates, based on the outstanding loan balance at the time of full disbursement:
5% for loans less than $ 350,000;
3% for loans between $ 350,000 and $ 2 million; and
1% for loans over $ 2 million.
However, in order to collect the processing fee on a PPP loan, a lender must first report to the SBA that a loan has been fully disbursed using the SBA 1502 form. The SBA will begin accepting these reports on debits. PPP loans fully disbursed on May 22, 2020. Once the report is received, the SBA will begin the process of paying the PPP processing fee to which the lender is eligible.
Lenders will not receive a processing fee for PPP loans under the following circumstances:
Before full loan disbursement;
If the loan is canceled before disbursement;
If the PPP loan is voluntarily canceled or terminated and repaid after disbursement but before the borrower’s certification safe date of May 18, 2020 (including if a borrower repays the PPP loan due to a misunderstanding or misunderstanding). application of the borrower’s certification regarding the need for the PPP loan application); Where
If the PPP loan is canceled, terminated, or repaid after disbursement (and after the borrower’s certification safe date of May 18, 2020) because the SBA performed a review of the loan and determined that the borrower was not not eligible for a PPP loan.
It is important to note that lenders should also be aware that the SBA will require reimbursement of processing fees if the SBA determines that the borrower was not eligible to receive a PPP loan within one year of loan disbursement or that the lender has not fulfilled its obligations under the PPP. . Reimbursement of processing fees due to the ineligibility of a borrower will have no effect on the SBA loan guarantee, provided the lender has complied with its obligations under the PPP. In cases where it turns out that the lender has not met the relevant obligations, the SBA will request reimbursement of the loan processing fees and may also determine that the loan is not eligible for collateral.
For more information, please see the SBA Notice, PPP Lender Processing Fee Payment and 1502 Reporting Process, available here.
© 2021 Vedder PriceRevue nationale de droit, volume X, number 143