Paycheck Protection Program: Treasury Guidance on Processing Fees

Winthrop & Weinstine, P.A.
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Winthrop & Weinstine, P.A.

Yesterday, Treasury released an updated set of rules that finally provide guidance on how banks and other lenders participating in the SBA’s Paycheck Protection Program (“PPP”) can report disbursements of funds and collect on PPP processing fees. The newly updated rules make it clear that any PPP lender must make a one-time disbursement of funds for a PPP loan within 10 calendar days of loan approval; loan approval is determined as of the date the SBA issues a loan number for the PPP loan. For PPP loans that received an SBA loan number prior to yesterday, the 10 calendar day period begins as of April 28, 2020.

This guidance is important because the updated rules further clarified that the SBA is going to make available a specific SBA Form 1502 (the “Form”) which banks and other PPP lenders can use to report disbursement of PPP loans. This in turn will allow PPP lenders to collect the processing fees for PPP loans funded by the PPP lender. Lenders are required to electronically upload the Form within 20 calendar days after a PPP loan was approved by the SBA. For those loans which had been approved prior to the issuance of the Form, the Form must be completed and uploaded for each such loan by May 18, 2020.

Once the Form has been uploaded, each lender needs to provide ACH credit information for direct payment of the processing fees and must confirm that all PPP loans for which processing fees are requested have been fully disbursed on the dates and in the loan amounts reported. A lender will not receive a processing fee (1) prior to full disbursement of the PPP loan, (2) if the PPP loan is cancelled before disbursement, or (3) if the PPP loan was cancelled or voluntarily terminated and repaid after disbursement (including if the borrower repays the PPP loan proceeds to conform to the borrower’s certification regarding a necessity of the PPP loan request).

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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