SBA: PPP changes effective this week

The SBA this week plans to issue an interim final rule detailing and implementing pending changes to the Paycheck Protection Program.

Background: The changes announced last week include:

  • A revised loan calculation formula for sole proprietors, independent contractors, and self-employed individuals reportedly using gross income instead of net income, as advocated by ICBA.
  • $1 billion set aside for PPP loans to businesses in this category that do not have employees and are located in low- or moderate-income areas.
  • The elimination of qualifying restrictions for small-business owners delinquent on their federal student loans or with prior non-fraud felony convictions.
  • Allowing non-citizen small-business owners who are lawful U.S. residents to use Individual Taxpayer Identification Numbers to apply for relief.

More: Also of note:

  • SBA will issue a new application form this week for Schedule C borrowers, so lenders and borrowers should await that new form before submitting applications.
  • Loan amounts cannot be increased once the loan is disbursed to the borrower, so lenders and borrowers may wish to cancel loans that have not yet been disbursed and reapply using the new Schedule C application form once it is released.
  • SBA is experiencing a backlog of forgiveness applications that are in process and is redeploying resources to address the backlog and speed up processing.
  • SBA cannot approve any loans after the March 31 deadline set by statute, so banks should consider this deadline when submitting loan applications and allow for processing time and error resolution.

Current Window: A 14-day period during which only businesses with fewer than 20 employees can apply for PPP relief started last Wednesday, Feb. 24. Applications already in the pipeline or requiring error resolution will continue to be processed.

Resources: Additional PPP information and resources are available on the SBA and Treasury sites and ICBA's PPP and EIP News page.