Treasury Issues Guidelines, Application Form for SBA Paycheck Protection Program
All banks are eligible to make PPP loans
The Treasury Department today issued much-anticipated guidance for the Paycheck Protection Program (PPP), which starting this week will provide up to $350 billion in fully forgivable loans to help small businesses maintain payrolls during the coronavirus pandemic. The loans are fully guaranteed by the Small Business Administration, but the SBA will waive all SBA guaranty fees. PPP loans are made for two years at a 0.5 percent fixed rate with payments deferred for six months.
All banks, as well as a broad range of nonbanks, are eligible to make PPP loans. Existing SBA-certified lenders will be given delegated authority; others must be approved before making loans. Banks that have not yet been certified with SBA should submit an application to email@example.com. The SBA will quickly verify that banks applying are federally regulated, and new applicants will be able to process applications as soon as Friday, according to a senior administration official.
To underwrite PPP loans, lenders will need to verify that the borrower was in operation on Feb. 15, 2020, and that it had employees for whom it paid salaries and payroll taxes. The lender will also have to verify the dollar amount of average payroll costs. The SBA will not review loan applications, according to a senior administration official, but lenders will receive an SBA loan number and verify that the applicant has not already received a PPP loan.
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