Regulatory Update: SBA Issues PPP Forgiveness Guidance

The night of Friday, May 22, the Department of the Treasury and Small Business Administration (SBA) released new Paycheck Protection Program (PPP) guidance that provided some clarity on several loan forgiveness questions. The 19-page interim rule on PPP review procedures and related borrower and lender responsibilities covers procedural details. Most notably the rule:

• Establishes that the SBA may review any PPP loan, regardless of size, to determine if the borrower is eligible for PPP loans under the CARES Act, whether the borrower calculated the loan amount correctly and used the funds for eligible costs, and whether the borrower is eligible for the amount of loan forgiveness it requests.
• Declares that borrowers may appeal SBA determinations within 30 days of receipt. The guidance also says an appeal process will be established, with the specifics coming in a later interim final rule.
• Requires lenders to decide on loan forgiveness within 60 days of receipt of the complete application from the borrower. The SBA then has 90 days to review the loan forgiveness application.
• Clarifies that borrowers may be asked questions by lenders and the SBA.