PAYCHECK PROTECTION PROGRAM

Lenders must electronically submit SBA Form 1502 reporting information to the SBA by the later of: (1) May 29, 2020, or (2) 10 calendar days after disbursement or cancellation of a PPP loan. After submitting the initial SBA Form 1502 report, lenders must submit PPP loan information to SBA on a monthly basis. 

Lenders must provide monthly 1502 reports that include loan status information for their PPP loans regardless of whether the borrower made a payment in the current month. All PPP loans are deferred.

The deferment period runs until (i) the date that SBA remits the forgiveness amount or notifies the lender that the borrower is not eligible for forgiveness or (ii) for a borrower that does not submit a timely forgiveness application, 10 months after the end of the loan forgiveness covered period. Lenders must continue reporting on a loan until the lender notifies SBA that the loan has been paid in full.

After a lender reports a loan as fully disbursed, the lender must submit monthly PPP 1502 reports on or before the 15^th of each month, or if the 15^th is not a business day, on the next business day after the 15^th. 

The first monthly PPP 1502 report is due on or before July 15, 2020, however, lenders are permitted a 2 day grace period to report for this month only.  Lenders must continue to use separate 1502 reports for PPP loans and regular 7(a) loans.  The regular 7(a) loan 1502 report and payment due dates for calendar year 2020 remain unchanged, as published in SBA Information Notice 5000-19025.

After a PPP forgiveness purchase, if no loan balance remains, lender must report the PPP loan as paid in full on the next SBA Form 1502 report. If a loan balance remains after forgiveness purchase, lender must report the reduction in the loan balance for the forgiveness amount on the next SBA Form 1502 report and must service the remaining balance of the loan in accordance with PPP requirements.  Note that a PPP loan should not be reported as “paid in full” simply because it has been transferred to another lender.

SBA may begin a review of any PPP loan of any size at any time in SBA’s discretion. If SBA undertakes such a review, SBA will notify the lender in writing and the lender must notify the borrower in writing within five business days of receipt.

Within five business days of receipt of such notice, the lender shall transmit to SBA electronic copies of the following:

1. The Borrower Application Form (SBA Form 2483 or lender’s equivalent form) and all supporting documentation provided by the borrower.
2. The Loan Forgiveness Application (SBA Form 3508, SBA Form 3508EZ, or lender’s equivalent form), and all supporting documentation provided by the borrower to the lender with the forgiveness application, including payroll documentation, non-payroll documentation, and full-time equivalent employee documentation, if applicable (if the lender has received such application).
   
   If the lender receives such application after it receives notice that SBA has commenced a loan review, the lender shall transmit electronic copies of the application and all supporting documentation provided by the borrower to SBA within five business days of receipt.The lender must also notify the borrower that the loan forgiveness application is denied without prejudice due to the pending SBA review, and notify SBA through the PPP Forgiveness Platform when that lender decision is made.
   
   The lender must also request that the borrower provide the lender with the applicable documentation that the instructions to the loan forgiveness application form (SBA Form 3508, 3508EZ, or lender’s equivalent form) instruct the borrower to maintain but not submit (documentation listed under “Documents that Each Borrower Must Maintain but is Not Required to Submit”). The lender must submit documents received from the borrower to SBA within 5 business days of receipt from the borrower.
3. A signed and certified transcript of account.
4. A copy of the executed note evidencing the PPP loan.
5. Any other documents related to the loan requested by SBA.

If SBA has notified the lender that SBA has commenced a loan review, the lender shall not approve any application for loan forgiveness for such loan until SBA notifies the lender in writing that SBA has completed its review. 

If loan documentation submitted to SBA by the lender or any other information indicates that the borrower may be ineligible for a PPP loan or may be ineligible to receive the loan amount or loan forgiveness amount claimed by the borrower, SBA will require the lender to contact the borrower in writing to request additional information. SBA may also request additional information directly from the borrower.

The lender must provide any additional information provided to it by the borrower to SBA. SBA will consider all information provided by the borrower in response to such an inquiry. Failure to respond to SBA’s inquiry may result in a determination that the borrower was ineligible for a PPP loan or ineligible to receive the loan amount or loan forgiveness amount claimed by the borrower.

If an eligible loan recipient fails to apply for loan forgiveness within ten months after the end of the covered period, the loan recipient must begin making principal and interest payments to the lender.

An EIDL loan may not be refinanced with a PPP loan when the PPP borrower received the EIDL loan before January 31, 2020 or after April 3, 2020. An EIDL loan is not required to be refinanced with a PPP loan when the PPP borrower received funds from an EIDL loan from January 31, 2020 through April 3, 2020 and the PPP borrower used the EIDL loan for purposes other than payroll costs.

A PPP loan must be used to refinance the full amount of the EIDL loan when the PPP borrower received funds from the EIDL loan from January 31, 2020 through April 3, 2020 and the PPP borrower used the EIDL loan funds to pay payroll costs.

The amount of the EIDL loan to be refinanced does not include the amount of any EIDL “advance” (also referred to as an EIDL “grant”) received by the PPP borrower, because the EIDL advance does not need to be repaid. The amount of any EIDL “advance” will be deducted from the borrower’s forgiveness amount.

Yes. The relationship of a crewmember described in Section 3121(b)(20) of the Internal Revenue Code and a fishing boat owner or operator is analogous to a joint venture or partnership for purposes of the PPP.

As a result, a fishing boat owner may include compensation reported on Box 5 of IRS Form 1099-MISC and paid to a crewmember described in Section 3121(b)(20) of the Internal Revenue Code, up to $100,000 annualized, as a payroll cost in its PPP loan application.

However, if the crewmember received their own PPP loan and is seeking forgiveness of that loan based on compensation received from the fishing boat owner or operator, the fishing boat owner or operator may not also seek forgiveness for compensation paid to that same crewmember (see related question under PPP Loan Forgiveness and Loan Review).

May a fishing boat owner include as payroll costs in its application for loan forgiveness any compensation paid to a crewmember who received his or her own PPP loan and is seeking forgiveness for amounts of compensation the crewmember received for performing services described in Section 3121(b)(20) of the Internal Revenue Code with respect to that owner’s fishing boat? 

No. If a fishing boat crewmember obtains his or her own PPP loan and seeks forgiveness of that loan based in part on compensation from a particular fishing boat owner, the fishing boat owner cannot also obtain PPP loan forgiveness based on compensation paid to that same crewmember.

This restriction applies only if the crewmember is performing services described in Section 3121(b)(20) of the Internal Revenue Code for the particular fishing boat owner.  This restriction is necessary to prevent fishing boat owners and crewmembers from claiming forgiveness for the same payroll costs (for the owner’s PPP loan, the compensation to a specific crewmember; for the crewmember’s PPP loan, the compensation from the owner to that crewmember).

As a result, only the crewmember’s PPP loan is eligible for forgiveness, and the owner may not obtain forgiveness for any payroll costs paid to the crewmember. The fishing boat owner is responsible for determining whether any of its crewmembers during the covered period for loan forgiveness received their own PPP loans.

Due to the increased risk of duplicate payroll costs, PPP loans to fishing boat owners are more likely to be subject to an SBA loan review.