As has become a theme, late Friday night, the Small Business Administration (SBA) and the Treasury Department issued two sets of guidance relative to forgiveness of the Paycheck Protection Program (PPP) loan proceeds. In the first interim final rule, the agencies provide detailed answers on some of the forgiveness questions that have been plaguing borrowers, while the second interim final rule details the forgiveness application and review procedures for borrowers, lenders, and SBA.
These guidance documents are critical for borrowers who are on the cusp of completing their eight-week PPP loan covered period and therefore preparing to seek forgiveness, and also critical for PPP lenders that will be making initial forgiveness determinations. We therefore are reviewing the guidance documents in detail but wanted to provide initial impressions and key points of emphasis. Notably, neither document discusses or explains the uncertainty around loan eligibility created by the Treasury’s FAQs and comments concerning additional sources of liquidity despite many borrowers anxiously seeking additional information on this particular point.
On the whole, the forgiveness guidance largely tracks and confirms the information provided in the instructions on the SBA Forgiveness Application. But a few clarifications are key:
As far as the forgiveness application and review procedures are concerned, the guidance confirms that lenders must make forgiveness decisions within 60 days after the borrower makes a forgiveness application. The general expectation would be for SBA to complete its review process within the 90-day period thereafter. But critically important, the guidance provides some additional clarity regarding SBA’s review authority: