The Small Business Administration (SBA) and Treasury Friday released two interim final rules providing Paycheck Protection Program (PPP) guidance to help borrowers and lenders. CUNA’s CompBlog contains a detailed analysis of the rules and what they mean for PPP lenders and borrowers.

The first rule outlines the general loan forgiveness process for applications that are not reviewed by SBA prior to the participating lender’s decision on the forgiveness application. This rule expands upon the Loan Forgiveness Application and Instructions issued by SBA on May 15. 

The second rule outlines the procedures SBA will use when reviewing a PPP loan for loan forgiveness as well as the borrower and lender obligations associated with those procedures.

In general, PPP borrowers can request forgiveness of their PPP loan in an amount equal to the sum of the following costs incurred, and payments made, during the covered period:

• Payroll costs (the rule provides additional detail on what is included under this definition);
• Interest payments on any business mortgage obligation on real or personal property that was incurred before Feb. 15, 2020;
• Payments on business rent obligations on real or personal property under a lease agreement in force before Feb. 15; and
• Business utility payments for the distribution of electricity, gas, water, transportation, telephone, or internet access for which service began before Feb. 15, 2020.

To receive loan forgiveness, a borrower must submit to their participating lender (or the lender servicing the PPP loan) the completed PPP Loan Forgiveness Application and certain required documentation.  

The participating lender reviews the application and documentation and has 60 days from receipt of the complete application to issue to SBA its decision regarding loan forgiveness and request payment from SBA for the amount determined to be eligible for forgiveness.

SBA will remit the appropriate forgiveness amount to the participating lender, including interest accrued through the date of payment, no later than 90 days after the participating lender issues its loan forgiveness decision to SBA. 

The borrower must repay any remaining balance on the loan that is not forgiven on or before the two-year maturity of the loan.

CUNA’s CompBlog entry provides additional details on the rules, including guidance on SBA’s process for review of applications, including what happens if a borrower is determined to be ineligible for a PPP loan.