On August 11, 2020, the SBA and Treasury issued two FAQs related to the Paycheck Protection Program (PPP) and three FAQs related to the PPP and Economic Injury Disaster Loans (EIDL). An interim final rule also was issued to establish procedures for prospective borrowers who want to appeal certain SBA loan decisions.

As reported by the Journal of Accountancy, PPP FAQs No. 50 and 51 were added to a list of FAQs that first published in April. The new FAQs:

  • Establish that the payment or nonpayment of fees of an agent or other third party is not material to the SBA’s guarantee of a PPP loan or to the SBA’s payment of fees to lenders.
  • Permit payments for vision and dental benefits to be included in the group health care benefits and insurance premiums that are eligible to be paid with PPP funds.

The three FAQs related to the PPP and EIDL were added to a list of PPP forgiveness FAQs that was first published Aug. 4. The new FAQs:

  • Describe how a lender will be able to confirm the amount of any EIDL advance that will be automatically deducted by the SBA from a PPP borrower’s loan forgiveness amount when the borrower has received both EIDL and PPP funds. Lenders can confirm the advance amount through the PPP Forgiveness Platform.
  • Instruct lenders on how to handle any remaining balance due on a PPP loan after the SBA remits the forgiveness amount to the lender, including if there has been a reduction in the forgiveness amount for an EIDL advance. Lenders must notify the borrower of the amount remitted by the SBA and when the first payment will be due. The loan must be repaid by the borrower before the maturity date, either two or five years. Previous guidance indicates that PPP loans originating before June 5, 2020, have a two-year term, unless the lender and borrower mutually agree to extend the maturity of such loans to five years. If the loan originated on or after June 5, 2020, the term is five years.
  • Outline what a lender should do if a borrower received an EIDL advance in excess of the amount of its PPP loan. Lenders must notify the borrower when the first payment will be due, and the loan must be repaid by the borrower before the maturity date, either two or five years.

The new interim final rule establishes numerous review procedures, including:

  • The right for a PPP borrower to request a review of a lender decision or an SBA decision that a borrower is ineligible for loan forgiveness. Final SBA decisions can be appealed to the Office of Hearings and Appeals (OHA). Borrowers may also request that the SBA review a lender decision outside of the OHA.
  • Documentation requirements, time limits, and a walkthrough of the processes. Oral hearings are permitted only in specific scenarios following a request or at the judge’s election.

As we have been doing with all coronavirus legislation and SBA guidance during these past several months, we will be sure to update you with any additional insight as soon as possible. Continue to check back here for the most up to date tax information and changes in response to coronavirus. If you have questions about this or related topics contact an MCB Advisor at 703-218-3600 or click here. 

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