WASHINGTON—The Small Business Administration (SBA) has issued a procedural notice regarding first draw Paycheck Protection Program (PPP) loan increases.
The notice, which impacts any loan that was approved on or before Aug. 8, 2020, details the circumstances under which borrowers may request a PPP loan increase from their original lender, NAFCU noted.
The PPP program officially reopened Jan. 11, allowing community financial institutions to submit applications for first draw loans. Starting last Friday, lenders with less than $1 billion in assets were allowed to submit applications. All other lenders will gain access to the program today.
The notice details how lenders can obtain the additional processing fee that is due on the increased loan or reapplication, as applicable.
The Particulars
As outlined in the notice, an increase may be provided to:
- Partnerships: for any amount of partner compensations that was not included in the original loan amount request, and the if the SBA has not yet remitted any forgiveness amount
- Seasonal employers: The consolidated appropriations act (CAA) altered the methodology for seasonal employees, indicating that a seasonal employee can receive the maximum loan amount based on the average payroll for any 12-week period beginning Feb. 15, 2019 – Feb. 15, 2020. If a seasonal employer can receive more funds under the new methodology, they may apply for an increase from the original lender if the SBA has not remitted any loan forgiveness
- Farmers and ranchers: Provisions in the CAA also changed the methodology for calculating the maximum amount a farmer or rancher could receive as long as the SBA has not provided any loan forgiveness yet
- Borrowers that did not accept the full amount of the first draw PPP loan
- Borrowers that fully repaid a PPP loan before Dec. 27, 2020, may reapply for a first draw loan in an amount they are eligible for under current rules if the SBA has not yet remitted any loan forgiveness