Interim final rule issued for Paycheck Protection Program
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The new interim final rule makes significant changes from original plans, including raising the fixed interest rate on loans made under the program from 0.5% to 1% in response to banking feedback that the terms could prevent community banks from participating in the program. Since passage of the CARES Act last week, CBA has shared bankers’ views with the agencies and particularly key Members of Congress who have the ear of Secretary Mnuchin to ensure the PPP works as intended when Congress passed it a week ago and that all banks can participate fully and efficiently.
The new rule provides greater clarity on several issues. It specifies underwriting expectations, which are limited to the application form and the streamlined certifications in it, the borrower’s payroll documentation and applicable Bank Secrecy Act requirements. Lenders may rely on borrower documentation for loan forgiveness, providing greater protection for lenders should borrowers misrepresent information in their application. The rule says “The lender does not need to conduct any verification if the borrower submits documentation supporting its request for loan forgiveness and attests that it has accurately verified the payments for eligible costs. The Administrator will hold harmless any lender that relies on such borrower documents and attestation from a borrower.”
After seven weeks, lenders may request that SBA purchase the expected forgiveness amount of PPP loans; these requests may be submitted in advance, and SBA will purchase the expected forgiveness amount of the loan within 15 days after it receives a complete report.
Banks already certified as 7(a) lenders may begin approving loan applications with SBA delegated authority today. The rule says that all banks (with few exceptions) will be “automatically qualified” to make loans with delegated authority once they submit SBA Form 3506, which is expected to be posted this morning on the SBA and Treasury websites, along with the official forms 2483 and 2484 to receive the 7(a) guaranty.