Guidance and Updates


JANUARY 13, 2021

IBAT-CREATED RESOURCES

SBA UPDATE

As anticipated and reported during today’s “Ask IBAT Anything” webinar, the SBA late this afternoon issued a press release announcing that lenders with $1 billion or less in assets will have access to the PPP loan portal on Friday, January 15 at 8:00 a.m. CST. Applications for both the first and second draw loan programs will be accepted by SBA at that time. The portal will be open for all other participating PPP lenders on Tuesday, January 19.

While no new guidance or other information was included as is often the case, IBAT has compiled a collection of resources to assist you with this process. This page includes links to all the guidance and our summary documents and templates.

We are advised by SBA that additional guidance is forthcoming on a variety of issues that we and others have raised. As always, feel free to email us at askibat@ibat.org with concerns, questions or comments. We will continue to update you as additional information becomes available, and thank you for your commitment to your customers and communities as we enter into this next round of PPP.


JANUARY 11, 2021

Yesterday, the Small Business Administration released much-needed information on how loan applications will be processed in the upcoming re-opening of the Paycheck Protection Program.

The good news is that lenders will use the forgiveness portal (forgiveness.sba.gov) to which you’ve become accustomed to process loan applications in the next round. The SBA has also provided an extensive user guide for the platform to assist you in logging in and processing loans.

The loan portal opens today for participating community financial institutions, which include Community Development Financial Institutions (CDFIs), Minority Depository Institutions (MDIs), Certified Development Companies (CDCs) and Microloan Intermediaries. As we have previously reported (see January 9 information below), insured depository institutions, including community banks of all sizes, are expected to have access to the portal later this week.


JANUARY 9, 2021

Last evening the Small Business Administration released additional information and documents related to the Paycheck Protection Program. This includes new application forms for first and second draw loans and a procedural notice on the handling of EIDL advances going forward (more on this below).

Updated First Draw Forms

Second Draw Forms

A Note on PPP 2.0 Opening

Please note that information we have first-hand from SBA indicates that community financial institutions will have exclusive access to the portal beginning Monday, January 11. Community financial institutions are defined in statute as: a community development financial institution; a minority depository institution, as defined in section 308 of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C. 1463 note); a development company that is certified under title V of the Small Business Investment Act of 1958 (15 U.S.C. 695 et seq.); and, an intermediary, as defined in subsection (m)(11). While timing is not certain at this juncture, we believe that other lenders, including community banks (unless qualified as a minority depository institution, in which case they will have early access), will be able to begin the applications process at some point next week, and likely as early as Wednesday. There has been some confusion on this issue, and we wish to make certain that our members are not spending the weekend attempting to piece this process together. You have some time to prepare.

Next Steps on EIDL Advance Issue

As you know, recent changes in legislation removed a requirement that EIDL advances be deducted from the forgiveness amount of any PPP loan. While the forgiveness portal has been updated to cease deducting EIDL amounts going forward, we have been awaiting guidance from the SBA on how they would handle those instances where forgiveness had already been processed. In a procedural notice, the SBA has indicated that:

For those loans where SBA remitted a forgiveness payment to a PPP lender that was reduced by an EIDL Advance, SBA will automatically remit a reconciliation payment to the PPP lender for the previously-deducted EIDL Advance amount, plus interest through the remittance date. PPP lenders are not required to request remittance of the reconciliation payment.

We hope that this will end a frustrating chapter (for borrowers and lenders alike) in this process. The full procedural notice is available here:

One Last Note: 1099s for SBA 7(a) and 504 Borrowers

A somewhat overlooked provision of the recently passed “Economic Aid Act” is a significant win for community banks and their SBA borrowers, and one upon which we have expressed significant concerns. Payments made by the SBA (under Section 1122 of the CARES Act) on existing SBA 7(a) and 504 loans in your portfolios are no longer considered taxable income with changes made in the recently passed bill. This means that the earlier Treasury directive to furnish your SBA borrowers with 1099s will be rescinded. The statutory language is very clear, and we have corroborated this with a leading accounting firm. While we have been advised that final guidance is forthcoming, we recommend that you put any processing or distribution of such 1099s on hold until there is clarity from Treasury on this issue.

Your IBAT team will continue to provide updates as they are released. For those of you who may have missed our special edition of “Ask IBAT Anything” yesterday, you can access the recording here. While there, you can also register for upcoming editions of Ask IBAT Anything. The next will be held on Wednesday, January 13. 


JANUARY 7, 2021

Late on Wednesday, January 6, the Treasury Department and Small Business Administration released two interim final rules related to the administration of the Paycheck Protection Program, in light of changes made in the recent COVID-19 economic stimulus package. 

The re-launched program (PPP 2.0) will allow companies (including sole proprietors) to receive a first time PPP loan with some revisions to the original program. Companies that received a first PPP loan and meet certain criteria may obtain a second draw loan. Each of these must be used to cover payroll and other eligible expenses.

Key differences between first and second draw loan rules are:

  • The maximum loan amount for first draw loans is $10MM, versus a maximum loan amount of $2MM for second draw loans.
  • Companies applying for a second draw loan must provide documentation of a 25% reduction in gross receipts in any quarter of 2020, in comparison with the same quarter of 2019. First draw PPP loans are not subject to the same requirement.

Additionally, for those who have (or will) process loans for farmers and ranchers, there are new provisions for both first and second draw loans, which allow for loan calculations to be based on gross income, rather than net. These changes allow for banks to recalculate the maximum loan amount of a loan to a farmer/rancher on any loan made before December 27, 2020 and grant an increase in the loan, provided it is not already forgiven.

PPP 2.0 also includes changes in entities that are eligible for participation in the Paycheck Protection Program and expansion of applicable uses. To capture these changes, your IBAT team has updated our PPP 2.0 Summary document with additional detail that was covered in the two Interim Final Rules.

We are expecting that loan portals will open on Monday, January 11 for PPP 2.0.

 
A special edition of “Ask IBAT Anything” is scheduled for Friday, January 8 from 12:00 to 1:00 p.m. Register here.

Join us with your questions once you have had a chance to review our summary document.

Of course, you can also send us questions anytime at askibat@ibat.org