With President-Elect Biden taking office today at Noon, it means the political officials at all agencies, including SBA, will no longer be employed. As a result, a lot of guidance was issued last night ahead of this change in government control. The following highlights the new guidance issued on a variety of topics.
Updated Forgiveness Applications Including Form for $150,000 or Less PPP Loans
The three existing forgiveness applications have all been updated to incorporate changes made in the Economic Aid Act. Most notably, the new SBA 3508S is the forgiveness application form to be used for PPP loans of $150,000 or less. The new versions of SBA 3508, 3508EZ, and 3508S may be found here. At the same time, SBA issued last night an interim final rule addressing forgiveness requirements and loan review procedures. A summary of these changes follows.
New Interim Final Rule on Forgiveness Requirements and Loan Review Procedures
SBA issued a 62-page Interim Final Rule (IFR) that largely incorporates provisions related to forgiveness requirements and loan review procedures from the 2020 program, as amended by the new Economic Aid Act. This interim final rule was written in a question and answer format so WBA will be working on updating its Master FAQ document in the next few days to incorporate these additions. The updated FAQs cover the following forgiveness related topics: loan forgiveness process, eligible payroll costs, eligible non-payroll costs, reductions to forgiveness amount, documentation requirements, and lender hold harmless. In addition, the IFR contains FAQs related to loan review procedures. The new IFR may be found here.
New Disclosure Form for Borrowers of Certain Controlling Interests
The SBA last night issued new SBA Form 3508D – Borrower’s Disclosure of Certain Controlling Interests, which is required to be completed in a narrow set of circumstances with a PPP forgiveness application. The Economic Aid Act requires borrowers that received First Draw PPP Loans before December 27, 2020, to disclose whether a “Covered Individual” directly or indirectly held a “Controlling Interest” in the Borrower at the time the Borrower’s loan application was submitted to the PPP lender. A “Covered Individual” means (a) any one of the following Government Officials: the President, the Vice President, the head of an Executive department as defined in 5 U.S.C. § 101, or a member of Congress, and (b) the Spouse, as determined under applicable common law, of a Government Official described in clause (a), determined as of the time the Borrower’s loan application was submitted to the PPP lender. A copy of the form may be found here.
More PPP information may be found on our Coronavirus Resource Page.
By, Ally Bates