Court filing

Case Deb 25 52372 Kservicing V Frohwein Doc97 3 Joint Appendix Ex11 20 2026 04 09 - Kservicing Bankruptcy

Filed April 9, 2026 in Kservicing Bankruptcy; one of 140 filings from this case.

No. 25-52372 · Doc. 97-2 · 2026-04-09 · Docket on CourtListener

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OMB Control No.: 3245-0407
Paycheck Protection Program
Expiration Date: 09/30/2020
Lender Application Form - Paycheck Protection Program Loan Guaranty

The purpose of this form is to collect identifying information about the Lender, the Applicant, the loan guaranty request, sources and uses of funds, the
proposed structure (which includes pricing and the loan term), and compliance with SBA Loan Program Requirements. This form reflects the data fields
that will be collected electronically from lenders; no paper version of this form is required or permitted to be submitted. As used in this application,
“Paycheck Protection Program Rule” refers to the rules in effect at the time you submit this application that have been issued by the Small Business
Administration (SBA) implementing the Paycheck Protection Program under Division A, Title I of the Coronavirus Aid, Relief, and Economic Security
Act (CARES Act).
Instructions for Lenders
All Paycheck Protection Program (PPP) loans are processed by all Lenders under delegated authority from SBA. This application must be submitted and
signed electronically in accordance with program requirements, and the information requested is to be retained in the Lender’s loan file.
A. Lender Information
Lender Name:

Lender Location ID:

Address:

City:

Lender Contact:

Ph:

(

St:
)

Contact Email:

Cell or Ext: (

Zip:
)

Title:

B. Applicant Information
 Sole Proprietor  Partnership  C-Corp  S-Corp  LLC  Independent contractor
 Eligible self-employed individual  501(c)(3) nonprofit  501(c)(19) veterans organization
 Tribal business (sec. 31(b)(2)(C) of Small Business Act)  Other

Applicant

Check One:

Applicant Legal Name:

____________________________

DBA:

____________________________

Business Tax ID:

Applicant Address:

____________________________

City, State, Zip:

Applicant Primary Contact:

Phone:

___________________
____________________________
(
)
-

C. Loan Structure Information
Amount of Loan Request: $
Guarantee %:
100%
Loan Term in # of Months:
24
Payment: Deferred 6 mos.
Applicant must provide documentation to Lender supporting how the loan amount was calculated in accordance with the Paycheck Protection
Program Rule and the CARES Act, and Lender must retain all such supporting documentation in Lender’s file.
Interest Rate:

D. Loan Amount Information
Average Monthly Payroll multiplied by 2.5
Refinance of Eligible Economic Injury Disaster Loan, net of Advance (if Applicable; see Paycheck
Protection Program Rule)
Total

$
$
$

E. General Eligibility (If the answer is no to either, the loan cannot be approved)



The Applicant has certified to the Lender that (1) it was in operation on February 15, 2020 and had employees for
whom the Applicant paid salaries and payroll taxes or paid independent contractors, as reported on Form(s) 1099MISC, (2) current economic uncertainty makes this loan request necessary to support the ongoing operations of the
Applicant, (3) the funds will be used to retain workers and maintain payroll or make mortgage interest payments,
lease payments, and utility payments, and (4) the Applicant has not received another Paycheck Protection Program
loan.
The Applicant has certified to the Lender that it (1) is an independent contractor, eligible self-employed individual,
or sole proprietor or (2) employs no more than the greater of 500 or employees or, if applicable, meets the size
standard in number of employees established by the SBA in 13 C.F.R. 121.201 for the Applicant’s industry.

 Yes

 No

 Yes

 No

F. Applicant Certification of Eligibility (If not true, the loan cannot be approved)



 True

The Applicant has certified to the Lender that the Applicant is eligible under the Paycheck Protection Program Rule.

G. Franchise/License/Jobber/Membership or Similar Agreement (If applicable and no, the loan cannot be approved)



The Applicant has represented to the Lender that it is a franchise that is listed in the SBA’s Franchise Directory.

SBA Form 2484 (Revised 04/20)

 Yes

 No

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H. Character Determination (If no, the loan cannot be approved)



The Applicant has represented to the Lender that neither the Applicant (if an individual) nor any individual owning
20% or more of the equity of the Applicant is subject to an indictment, criminal information, arraignment, or other
means by which formal criminal charges are brought in any jurisdiction, or is presently incarcerated, or on probation
or parole.
The Applicant has represented to the Lender that neither the Applicant (if an individual) nor any individual owning
20% or more of the equity of the Applicant has within the last 5 years, for any felony: 1) been convicted; 2) pleaded
guilty; 3) pleaded nolo contendere; 4) been placed on pretrial diversion; or 5) been placed on any form of parole or
probation (including probation before judgment).

 Yes

 No

 Yes

 No

I. Prior Loss to Government/Delinquent Federal Debt (If no, the loan cannot be approved)



The Applicant has certified to the Lender that neither the Applicant nor any owner (as defined in the Applicant’s
SBA Form 2483) is presently suspended, debarred, proposed for debarment, declared ineligible, voluntarily
excluded from participation in this transaction by any Federal department or agency, or presently involved in any
bankruptcy.
The Applicant has certified to the Lender that neither the Applicant nor any of its owners, nor any business
owned or controlled by any of them, ever obtained a direct or guaranteed loan from SBA or any other Federal
agency that is currently delinquent or has defaulted in the last 7 years and caused a loss to the government.

 Yes

 No

 Yes

 No

 Yes

 No

J. U.S. Employees (If no, the loan cannot be approved)



The Applicant has certified that the principal place of residence for all employees included in the Applicant’s
payroll calculation is the United States.

K. Fees (If yes, Lender may not pass any agent fee through to the Applicant or offset or pay the fee with the proceeds of this loan)
 Is the Lender using a third party to assist in the preparation of the loan application or application materials, or to
 Yes
perform other services in connection with this loan?

 No

SBA Certification to Financial Institution under Right to Financial Privacy Act (12 U.S.C. 3401)
By signing SBA Form 2483, Borrower Information Form in connection with this application for an SBA-guaranteed loan, the Applicant certifies that it
has read the Statements Required by Law and Executive Orders, which is attached to Form 2483. As such, SBA certifies that it has complied with the
applicable provisions of the Right to Financial Privacy Act of 1978 (12 U.S.C. 3401) and, pursuant to that Act, no further certification is required for
subsequent access by SBA to financial records of the Applicant/Borrower during the term of the loan guaranty.

Lender Certification
On behalf of the Lender, I certify that:



The Lender has complied with the applicable lender obligations set forth in paragraphs 3.b(i)-(iii) of the Paycheck Protection Program Rule.
The Lender has obtained and reviewed the required application (including documents demonstrating qualifying payroll amounts) of the Applicant
and will retain copies of such documents in the Applicant’s loan file.
I certify that:


Neither the undersigned Authorized Lender Official, nor such individual’s spouse or children, has a financial interest in the Applicant.

Authorized Lender Official:

Date:
Signature

Type or Print Name:

Title:

NOTE: According to the Paperwork Reduction Act, you are not required to respond to this collection of information unless it displays a currently
valid OMB Control Number. The estimated burden for completing this form, including time for reviewing instructions, gathering data needed, and
completing and reviewing the form is 25 minutes per response. Comments or questions on the burden estimates should be sent to U.S. Small
Business Administration, Director, Records Management Division, 409 3rd St., SW, Washington DC 20416, and/or SBA Desk Officer, Office of
Management and Budget, New Executive Office Building, Rm. 10202, Washington DC 20503. PLEASE DO NOT SEND FORMS TO THESE
ADDRESSES.

SBA Form 2484 (Revised 04/20)

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As of April 6, 2020
PAYCHECK PROTECTION PROGRAM LOANS
Frequently Asked Questions (FAQs)

The Small Business Administration (SBA), in consultation with the Department of the Treasury,
intends to provide timely additional guidance to address borrower and lender questions
concerning the implementation of the Paycheck Protection Program (PPP), established by section
1102 of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act or the Act). This
document will be updated on a regular basis.
Borrowers and lenders may rely on the guidance provided in this document as SBA’s
interpretation of the CARES Act and of the Paycheck Protection Program Interim Final Rule
(“PPP Interim Final Rule”) (link). The U.S. government will not challenge lender PPP actions
that conform to this guidance,1 and to the PPP Interim Final Rule and any subsequent rulemaking
in effect at the time.
1. Question: Paragraph 3.b.iii of the Paycheck Protection Program Interim Final Rule
states that lenders must “[c]onfirm the dollar amount of average monthly payroll costs for
the preceding calendar year by reviewing the payroll documentation submitted with the
borrower’s application.” Does that require that the lender replicate every borrower’s
calculations?
Answer: No. Providing an accurate calculation of payroll costs is the responsibility of
the borrower, and the borrower must attest to the accuracy of those calculations. Lenders
are expected to perform a good faith review, in a reasonable time, of the borrower’s
calculations and supporting documents concerning average monthly payroll cost. The
level of diligence by a lender should be informed by the quality of supporting documents
supplied by the borrower. Minimal review of calculations based on a payroll report by a
recognized third-party payroll processor, for example, would be reasonable.
If lenders identify errors in the borrower’s calculation or material lack of substantiation in
the borrower’s supporting documents, the lender should work with the borrower to
remedy the error.
2. Question: Are small business concerns (as defined in section 3 of the Small Business
Act, 15 U.S.C. 632) required to have 500 or fewer employees to be eligible borrowers in
the PPP?
Answer: No. Small business concerns can be eligible borrowers even if they have more
than 500 employees, as long as they satisfy the existing statutory and regulatory
definition of a “small business concern” under section 3 of the Small Business Act, 15
U.S.C. 632. A business can qualify if it meets the SBA employee-based or revenue-

This document does not carry the force and effect of law independent of the statute and regulations on which it is
based.

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based size standard corresponding to its primary industry. Go to www.sba.gov/size for
the industry size standards.
Additionally, a business can qualify for the Paycheck Protection Program as a small
business concern if it met both tests in SBA’s “alternative size standard” as of March 27,
2020: (1) maximum tangible net worth of the business is not more than $15 million; and
(2) the average net income after Federal income taxes (excluding any carry-over losses)
of the business for the two full fiscal years before the date of the application is not more
than $5 million.
A business that qualifies as a small business concern under section 3 of the Small
Business Act, 15 U.S.C. 632, may truthfully attest to its eligibility for PPP loans on the
Borrower Application Form, unless otherwise ineligible.
3. Question: Does my business have to qualify as a small business concern (as defined in
section 3 of the Small Business Act, 15 U.S.C. 632) in order to participate in the PPP?
Answer: No. In addition to small business concerns, a business is eligible for a PPP loan
if the business has 500 or fewer employees whose principal place of residence is in the
United States, or the business meets the SBA employee-based size standards for the
industry in which it operates (if applicable). Similarly, PPP loans are also available for
qualifying tax-exempt nonprofit organizations described in section 501(c)(3) of the
Internal Revenue Code (IRC), tax-exempt veterans organization described in section
501(c)(19) of the IRC, and Tribal business concerns described in section 31(b)(2)(C) of
the Small Business Act that have 500 or fewer employees whose principal place of
residence is in the United States, or meet the SBA employee-based size standards for the
industry in which they operate.
4. Question: Are lenders required to make an independent determination regarding
applicability of affiliation rules under 13 C.F.R. 121.301(f) to borrowers?
Answer: No. It is the responsibility of the borrower to determine which entities (if any)
are its affiliates and determine the employee headcount of the borrower and its affiliates.
Lenders are permitted to rely on borrowers’ certifications.
5. Question: Are borrowers required to apply SBA’s affiliation rules under 13 C.F.R.
121.301(f)?
Answer: Yes. Borrowers must apply the affiliation rules set forth in SBA’s Interim
Final Rule on Affiliation. A borrower must certify on the Borrower Application Form
that the borrower is eligible to receive a PPP loan, and that certification means that the
borrower is a small business concern as defined in section 3 of the Small Business Act
(15 U.S.C. 632), meets the applicable SBA employee-based or revenue-based size
standard, or meets the tests in SBA’s alternative size standard, after applying the
affiliation rules, if applicable. SBA’s existing affiliation exclusions apply to the PPP,
including, for example the exclusions under 13 CFR 121.103(b)(2).
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6. Question: The affiliation rule based on ownership (13 C.F.R. 121.301(f)(1)) states that
SBA will deem a minority shareholder in a business to control the business if the
shareholder has the right to prevent a quorum or otherwise block action by the board of
directors or shareholders. If a minority shareholder irrevocably gives up those rights, is it
still considered to be an affiliate of the business?
Answer: No. If a minority shareholder in a business irrevocably waives or relinquishes
any existing rights specified in 13 C.F.R. 121.301(f)(1), the minority shareholder would
no longer be an affiliate of the business (assuming no other relationship that triggers the
affiliation rules).
7. Question: The CARES Act excludes from the definition of payroll costs any employee
compensation in excess of an annual salary of $100,000. Does that exclusion apply to all
employee benefits of monetary value?
Answer: No. The exclusion of compensation in excess of $100,000 annually applies
only to cash compensation, not to non-cash benefits, including:
 employer contributions to defined-benefit or defined-contribution retirement
plans;
 payment for the provision of employee benefits consisting of group health care
coverage, including insurance premiums; and
 payment of state and local taxes assessed on compensation of employees.
8. Question: Do PPP loans cover paid sick leave?
Answer: Yes. PPP loans covers payroll costs, including costs for employee vacation,
parental, family, medical, and sick leave. However, the CARES Act excludes qualified
sick and family leave wages for which a credit is allowed under sections 7001 and 7003
of the Families First Coronavirus Response Act (Public Law 116–127). Learn more
about the Paid Sick Leave Refundable Credit --here.
9. Question: My small business is a seasonal business whose activity increases from April
to June. Considering activity from that period would be a more accurate reflection of my
business’s operations. However, my small business was not fully ramped up on February
15, 2020. Am I still eligible?
Answer: In evaluating a borrower’s eligibility, a lender may consider whether a seasonal
borrower was in operation on February 15, 2020 or for an 8-week period between
February 15, 2019 and June 30, 2019.
10. Question: What if an eligible borrower contracts with a third-party payer such as a
payroll provider or a Professional Employer Organization (PEO) to process payroll and
report payroll taxes?
Answer: SBA recognizes that eligible borrowers that use PEOs or similar payroll
providers are required under some state registration laws to report wage and other data on
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the Employer Identification Number (EIN) of the PEO or other payroll provider. In these
cases, payroll documentation provided by the payroll provider that indicates the amount
of wages and payroll taxes reported to the IRS by the payroll provider for the borrower’s
employees will be considered acceptable PPP loan payroll documentation. Relevant
information from a Schedule R (Form 941), Allocation Schedule for Aggregate Form 941
Filers, attached to the PEO’s or other payroll provider’s Form 941, Employer’s Quarterly
Federal Tax Return, should be used if it is available; otherwise, the eligible borrower
should obtain a statement from the payroll provider documenting the amount of wages
and payroll taxes. In addition, employees of the eligible borrower will not be considered
employees of the eligible borrower’s payroll provider or PEO.
11. Question: May lenders accept signatures from a single individual who is authorized to
sign on behalf of the borrower?
Answer: Yes. However, the borrower should bear in mind that, as the Borrower
Application Form indicates, only an authorized representative of the business seeking a
loan may sign on behalf of the business. An individual’s signature as an “Authorized
Representative of Applicant” is a representation to the lender and to the U.S. government
that the signer is authorized to make the certifications, including with respect to the
applicant and each owner of 20% or more of the applicant’s equity, contained in the
Borrower Application Form. Lenders may rely on that representation and accept a single
individual’s signature on that basis.
12. Question: I need to request a loan to support my small business operations in light of
current economic uncertainty. However, I pleaded guilty to a felony crime a very long
time ago. Am I still eligible for the PPP?
Answer: Yes. Businesses are only ineligible if an owner of 20 percent or more of the
equity of the applicant is presently incarcerated, on probation, on parole; subject to an
indictment, criminal information, arraignment, or other means by which formal criminal
charges are brought in any jurisdiction; or, within the last five years, for any felony, has
been convicted; pleaded guilty; pleaded nolo contendere; been placed on pretrial
diversion; or been placed on any form of parole or probation (including probation before
judgment).
13. Question: Are lenders permitted to use their own online portals and an electronic form
that they create to collect the same information and certifications as in the Borrower
Application Form, in order to complete implementation of their online portals?
Answer: Yes. Lenders may use their own online systems and a form they establish that
asks for the same information (using the same language) as the Borrower Application
Form. Lenders are still required to send the data to SBA using SBA’s interface.
14. Question: What time period should borrowers use to determine their number of
employees and payroll costs to calculate their maximum loan amounts?

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Answer: In general, borrowers can calculate their aggregate payroll costs using data
either from the previous 12 months or from calendar year 2019. For seasonal businesses,
the applicant may use average monthly payroll for the period between February 15, 2019,
or March 1, 2019, and June 30, 2019. An applicant that was not in business from
February 15, 2019 to June 30, 2019 may use the average monthly payroll costs for the
period January 1, 2020 through February 29, 2020.
Borrowers may use their average employment over the same time periods to determine
their number of employees, for the purposes of applying an employee-based size
standard. Alternatively, borrowers may elect to use SBA’s usual calculation: the average
number of employees per pay period in the 12 completed calendar months prior to the
date of the loan application (or the average number of employees for each of the pay
periods that the business has been operational, if it has not been operational for 12
months).
15. Question: Should payments that an eligible borrower made to an independent contractor
or sole proprietor be included in calculations of the eligible borrower’s payroll costs?
Answer: No. Any amounts that an eligible borrower has paid to an independent
contractor or sole proprietor should be excluded from the eligible business’s payroll
costs. However, an independent contractor or sole proprietor will itself be eligible for a
loan under the PPP, if it satisfies the applicable requirements.
16. Question: How should a borrower account for federal taxes when determining its
payroll costs for purposes of the maximum loan amount, allowable uses of a PPP loan,
and the amount of a loan that may be forgiven?
Answer: Under the Act, payroll costs are calculated on a gross basis without regard to
(i.e., not including subtractions or additions based on) federal taxes imposed or withheld,
such as the employee’s and employer’s share of Federal Insurance Contributions Act
(FICA) and income taxes required to be withheld from employees. As a result, payroll
costs are not reduced by taxes imposed on an employee and required to be withheld by
the employer, but payroll costs do not include the employer’s share of payroll tax. For
example, an employee who earned $4,000 per month in gross wages, from which $500 in
federal taxes was withheld, would count as $4,000 in payroll costs. The employee would
receive $3,500, and $500 would be paid to the federal government. However, the
employer-side federal payroll taxes imposed on the $4,000 in wages are excluded from
payroll costs under the statute.2
2

The definition of “payroll costs” in the CARES Act, 15 U.S.C. 636(a)(36)(A)(viii), excludes “taxes imposed or
withheld under chapters 21, 22, or 24 of the Internal Revenue Code of 1986 during the covered period,” defined as
February 15, 2020, to June 30, 2020. As described above, the SBA interprets this statutory exclusion to mean that
payroll costs are calculated on a gross basis, without subtracting federal taxes that are imposed on the employee or
withheld from employee wages. Unlike employer-side payroll taxes, such employee-side taxes are ordinarily
expressed as a reduction in employee take-home pay; their exclusion from the definition of payroll costs means
payroll costs should not be reduced based on taxes imposed on the employee or withheld from employee wages.
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17. Question: I filed or approved a loan application based on the version of the PPP Interim
Final Rule published on April 2, 2020. Do I need to take any action based on the updated
guidance in these FAQs?
Answer: No. Borrowers and lenders may rely on the laws, rules, and guidance available
at the time of the relevant application. However, borrowers whose previously submitted
loan applications have not yet been processed may revise their applications based on
clarifications reflected in these FAQs.
18. Question: Are PPP loans for existing customers considered new accounts for FinCEN
Rule CDD purposes? Are lenders required to collect, certify, or verify beneficial
ownership information in accordance with the rule requirements for existing customers?
Answer: If the PPP loan is being made to an existing customer and the necessary
information was previously verified, you do not need to re-verify the information.
Furthermore, if federally insured depository institutions and federally insured credit
unions eligible to participate in the PPP program have not yet collected beneficial
ownership information on existing customers, such institutions do not need to collect and
verify beneficial ownership information for those customers applying for new PPP loans,
unless otherwise indicated by the lender’s risk-based approach to BSA compliance.

remain paid and employed. Further, because the reference period for determining a borrower’s maximum loan
amount will largely or entirely precede the period from February 15, 2020, to June 30, 2020, and the period during
which borrowers will be subject to the restrictions on allowable uses of the loans may extend beyond that period, for
purposes of the determination of allowable uses of loans and the amount of loan forgiveness, this statutory exclusion
will apply with respect to such taxes imposed or withheld at any time, not only during such period.

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As of April 7, 2020
PAYCHECK PROTECTION PROGRAM LOANS
Frequently Asked Questions (FAQs)

The Small Business Administration (SBA), in consultation with the Department of the Treasury,
intends to provide timely additional guidance to address borrower and lender questions
concerning the implementation of the Paycheck Protection Program (PPP), established by section
1102 of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act or the Act). This
document will be updated on a regular basis.
Borrowers and lenders may rely on the guidance provided in this document as SBA’s
interpretation of the CARES Act and of the Paycheck Protection Program Interim Final Rule
(“PPP Interim Final Rule”) (link). The U.S. government will not challenge lender PPP actions
that conform to this guidance,1 and to the PPP Interim Final Rule and any subsequent rulemaking
in effect at the time.
1. Question: Paragraph 3.b.iii of the PPP Interim Final Rule states that lenders must
“[c]onfirm the dollar amount of average monthly payroll costs for the preceding calendar
year by reviewing the payroll documentation submitted with the borrower’s application.”
Does that require the lender to replicate every borrower’s calculations?
Answer: No. Providing an accurate calculation of payroll costs is the responsibility of
the borrower, and the borrower attests to the accuracy of those calculations on the
Borrower Application Form. Lenders are expected to perform a good faith review, in a
reasonable time, of the borrower’s calculations and supporting documents concerning
average monthly payroll cost. For example, minimal review of calculations based on a
payroll report by a recognized third-party payroll processor would be reasonable. In
addition, as the PPP Interim Final Rule indicates, lenders may rely on borrower
representations, including with respect to amounts required to be excluded from payroll
costs.
If the lender identifies errors in the borrower’s calculation or material lack of
substantiation in the borrower’s supporting documents, the lender should work with the
borrower to remedy the issue.
2. Question: Are small business concerns (as defined in section 3 of the Small Business
Act, 15 U.S.C. 632) required to have 500 or fewer employees to be eligible borrowers in
the PPP?
Answer: No. Small business concerns can be eligible borrowers even if they have more
than 500 employees, as long as they satisfy the existing statutory and regulatory
definition of a “small business concern” under section 3 of the Small Business Act, 15
U.S.C. 632. A business can qualify if it meets the SBA employee-based or revenue-

This document does not carry the force and effect of law independent of the statute and regulations on which it is
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based size standard corresponding to its primary industry. Go to www.sba.gov/size for
the industry size standards.
Additionally, a business can qualify for the Paycheck Protection Program as a small
business concern if it met both tests in SBA’s “alternative size standard” as of March 27,
2020: (1) maximum tangible net worth of the business is not more than $15 million; and
(2) the average net income after Federal income taxes (excluding any carry-over losses)
of the business for the two full fiscal years before the date of the application is not more
than $5 million.
A business that qualifies as a small business concern under section 3 of the Small
Business Act, 15 U.S.C. 632, may truthfully attest to its eligibility for PPP loans on the
Borrower Application Form, unless otherwise ineligible.
3. Question: Does my business have to qualify as a small business concern (as defined in
section 3 of the Small Business Act, 15 U.S.C. 632) in order to participate in the PPP?
Answer: No. In addition to small business concerns, a business is eligible for a PPP loan
if the business has 500 or fewer employees whose principal place of residence is in the
United States, or the business meets the SBA employee-based size standards for the
industry in which it operates (if applicable). Similarly, PPP loans are also available for
qualifying tax-exempt nonprofit organizations described in section 501(c)(3) of the
Internal Revenue Code (IRC), tax-exempt veterans organization described in section
501(c)(19) of the IRC, and Tribal business concerns described in section 31(b)(2)(C) of
the Small Business Act that have 500 or fewer employees whose principal place of
residence is in the United States, or meet the SBA employee-based size standards for the
industry in which they operate.
4. Question: Are lenders required to make an independent determination regarding
applicability of affiliation rules under 13 C.F.R. 121.301(f) to borrowers?
Answer: No. It is the responsibility of the borrower to determine which entities (if any)
are its affiliates and determine the employee headcount of the borrower and its affiliates.
Lenders are permitted to rely on borrowers’ certifications.
5. Question: Are borrowers required to apply SBA’s affiliation rules under 13 C.F.R.
121.301(f)?
Answer: Yes. Borrowers must apply the affiliation rules set forth in SBA’s Interim
Final Rule on Affiliation. A borrower must certify on the Borrower Application Form
that the borrower is eligible to receive a PPP loan, and that certification means that the
borrower is a small business concern as defined in section 3 of the Small Business Act
(15 U.S.C. 632), meets the applicable SBA employee-based or revenue-based size
standard, or meets the tests in SBA’s alternative size standard, after applying the
affiliation rules, if applicable. SBA’s existing affiliation exclusions apply to the PPP,
including, for example the exclusions under 13 CFR 121.103(b)(2).
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6. Question: The affiliation rule based on ownership (13 C.F.R. 121.301(f)(1)) states that
SBA will deem a minority shareholder in a business to control the business if the
shareholder has the right to prevent a quorum or otherwise block action by the board of
directors or shareholders. If a minority shareholder irrevocably gives up those rights, is it
still considered to be an affiliate of the business?
Answer: No. If a minority shareholder in a business irrevocably waives or relinquishes
any existing rights specified in 13 C.F.R. 121.301(f)(1), the minority shareholder would
no longer be an affiliate of the business (assuming no other relationship that triggers the
affiliation rules).
7. Question: The CARES Act excludes from the definition of payroll costs any employee
compensation in excess of an annual salary of $100,000. Does that exclusion apply to all
employee benefits of monetary value?
Answer: No. The exclusion of compensation in excess of $100,000 annually applies
only to cash compensation, not to non-cash benefits, including:
 employer contributions to defined-benefit or defined-contribution retirement
plans;
 payment for the provision of employee benefits consisting of group health care
coverage, including insurance premiums; and
 payment of state and local taxes assessed on compensation of employees.
8. Question: Do PPP loans cover paid sick leave?
Answer: Yes. PPP loans covers payroll costs, including costs for employee vacation,
parental, family, medical, and sick leave. However, the CARES Act excludes qualified
sick and family leave wages for which a credit is allowed under sections 7001 and 7003
of the Families First Coronavirus Response Act (Public Law 116–127). Learn more
about the Paid Sick Leave Refundable Credit here.
9. Question: My small business is a seasonal business whose activity increases from April
to June. Considering activity from that period would be a more accurate reflection of my
business’s operations. However, my small business was not fully ramped up on February
15, 2020. Am I still eligible?
Answer: In evaluating a borrower’s eligibility, a lender may consider whether a seasonal
borrower was in operation on February 15, 2020 or for an 8-week period between
February 15, 2019 and June 30, 2019.
10. Question: What if an eligible borrower contracts with a third-party payer such as a
payroll provider or a Professional Employer Organization (PEO) to process payroll and
report payroll taxes?
Answer: SBA recognizes that eligible borrowers that use PEOs or similar payroll
providers are required under some state registration laws to report wage and other data on
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the Employer Identification Number (EIN) of the PEO or other payroll provider. In these
cases, payroll documentation provided by the payroll provider that indicates the amount
of wages and payroll taxes reported to the IRS by the payroll provider for the borrower’s
employees will be considered acceptable PPP loan payroll documentation. Relevant
information from a Schedule R (Form 941), Allocation Schedule for Aggregate Form 941
Filers, attached to the PEO’s or other payroll provider’s Form 941, Employer’s Quarterly
Federal Tax Return, should be used if it is available; otherwise, the eligible borrower
should obtain a statement from the payroll provider documenting the amount of wages
and payroll taxes. In addition, employees of the eligible borrower will not be considered
employees of the eligible borrower’s payroll provider or PEO.
11. Question: May lenders accept signatures from a single individual who is authorized to
sign on behalf of the borrower?
Answer: Yes. However, the borrower should bear in mind that, as the Borrower
Application Form indicates, only an authorized representative of the business seeking a
loan may sign on behalf of the business. An individual’s signature as an “Authorized
Representative of Applicant” is a representation to the lender and to the U.S. government
that the signer is authorized to make the certifications, including with respect to the
applicant and each owner of 20% or more of the applicant’s equity, contained in the
Borrower Application Form. Lenders may rely on that representation and accept a single
individual’s signature on that basis.
12. Question: I need to request a loan to support my small business operations in light of
current economic uncertainty. However, I pleaded guilty to a felony crime a very long
time ago. Am I still eligible for the PPP?
Answer: Yes. Businesses are only ineligible if an owner of 20 percent or more of the
equity of the applicant is presently incarcerated, on probation, on parole; subject to an
indictment, criminal information, arraignment, or other means by which formal criminal
charges are brought in any jurisdiction; or, within the last five years, for any felony, has
been convicted; pleaded guilty; pleaded nolo contendere; been placed on pretrial
diversion; or been placed on any form of parole or probation (including probation before
judgment).
13. Question: Are lenders permitted to use their own online portals and an electronic form
that they create to collect the same information and certifications as in the Borrower
Application Form, in order to complete implementation of their online portals?
Answer: Yes. Lenders may use their own online systems and a form they establish that
asks for the same information (using the same language) as the Borrower Application
Form. Lenders are still required to send the data to SBA using SBA’s interface.
14. Question: What time period should borrowers use to determine their number of
employees and payroll costs to calculate their maximum loan amounts?

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Answer: In general, borrowers can calculate their aggregate payroll costs using data
either from the previous 12 months or from calendar year 2019. For seasonal businesses,
the applicant may use average monthly payroll for the period between February 15, 2019,
or March 1, 2019, and June 30, 2019. An applicant that was not in business from
February 15, 2019 to June 30, 2019 may use the average monthly payroll costs for the
period January 1, 2020 through February 29, 2020.
Borrowers may use their average employment over the same time periods to determine
their number of employees, for the purposes of applying an employee-based size
standard. Alternatively, borrowers may elect to use SBA’s usual calculation: the average
number of employees per pay period in the 12 completed calendar months prior to the
date of the loan application (or the average number of employees for each of the pay
periods that the business has been operational, if it has not been operational for 12
months).
15. Question: Should payments that an eligible borrower made to an independent contractor
or sole proprietor be included in calculations of the eligible borrower’s payroll costs?
Answer: No. Any amounts that an eligible borrower has paid to an independent
contractor or sole proprietor should be excluded from the eligible business’s payroll
costs. However, an independent contractor or sole proprietor will itself be eligible for a
loan under the PPP, if it satisfies the applicable requirements.
16. Question: How should a borrower account for federal taxes when determining its
payroll costs for purposes of the maximum loan amount, allowable uses of a PPP loan,
and the amount of a loan that may be forgiven?
Answer: Under the Act, payroll costs are calculated on a gross basis without regard to
(i.e., not including subtractions or additions based on) federal taxes imposed or withheld,
such as the employee’s and employer’s share of Federal Insurance Contributions Act
(FICA) and income taxes required to be withheld from employees. As a result, payroll
costs are not reduced by taxes imposed on an employee and required to be withheld by
the employer, but payroll costs do not include the employer’s share of payroll tax. For
example, an employee who earned $4,000 per month in gross wages, from which $500 in
federal taxes was withheld, would count as $4,000 in payroll costs. The employee would
receive $3,500, and $500 would be paid to the federal government. However, the
employer-side federal payroll taxes imposed on the $4,000 in wages are excluded from
payroll costs under the statute.2
2

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17. Question: I filed or approved a loan application based on the version of the PPP Interim
Final Rule published on April 2, 2020. Do I need to take any action based on the updated
guidance in these FAQs?
Answer: No. Borrowers and lenders may rely on the laws, rules, and guidance available
at the time of the relevant application. However, borrowers whose previously submitted
loan applications have not yet been processed may revise their applications based on
clarifications reflected in these FAQs.
18. Question: Are PPP loans for existing customers considered new accounts for FinCEN
Rule CDD purposes? Are lenders required to collect, certify, or verify beneficial
ownership information in accordance with the rule requirements for existing customers?
Answer: If the PPP loan is being made to an existing customer and the necessary
information was previously verified, you do not need to re-verify the information.
Furthermore, if federally insured depository institutions and federally insured credit
unions eligible to participate in the PPP program have not yet collected beneficial
ownership information on existing customers, such institutions do not need to collect and
verify beneficial ownership information for those customers applying for new PPP loans,
unless otherwise indicated by the lender’s risk-based approach to BSA compliance.

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EXHIBIT 16

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Short Message Report
Conversations: 1
Total Messages: 62

Participants: 2
Date Range: 4/8/2020

Outline of Conversations
��

DD3G3JC23 - 2020/04/08 62 messages on 4/8/2020 • Nipun Goel <ngoel@kabbage.com> • Spencer
Robinson <srobinson@kabbage.com>

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Messages in chronological order (times are shown in GMT +00:00)
DD3G3JC23 - 2020/04/08

Spencer Robinson <srobinson@kabbage.com>

4/8/2020, 1:11 AM

hey just finished with kids...do we have apps to go through?

Spencer Robinson <srobinson@kabbage.com>

1:16 AM

...otherwise I'm just looking through docs...
N

Nipun Goel <ngoel@kabbage.com>

1:22 AM

yeah one sec

Spencer Robinson <srobinson@kabbage.com>

1:27 AM

ummm...i might need you to explain this sheet to me....
N

Nipun Goel <ngoel@kabbage.com>

2:27 AM

on the phone with sam
N

Nipun Goel <ngoel@kabbage.com>

2:28AM

i fully appreciate you likely have zero knowledge of this
N

Nipun Goel <ngoel@kabbage.com>

2:28AM

but any idea how to capture total apps reviewed/

Spencer Robinson <srobinson@kabbage.com>

2:28AM

ha....from what context...

Spencer Robinson <srobinson@kabbage.com>

2:28AM

"looked at" we could get
N

Nipun Goel <ngoel@kabbage.com>

2:28AM

yeah
Nipun Goel <ngoel@kabbage.com>

2:29 AM

i have number "ready to be approved" if ya will
N

Nipun Goel <ngoel@kabbage.com>

2:29 AM

out of our 400
Nipun Goel <ngoel@kabbage.com>

2:29 AM

but no way of understanding of the 2400ish apps

Spencer Robinson <srobinson@kabbage.com>

2:29 AM

but decisions are basically 0
N

Nipun Goel <ngoel@kabbage.com>

2:29 AM

how many have been touched or not

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Spencer Robinson <srobinson@kabbage.com>

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2:29 AM

Kaden would have the touched

Spencer Robinson <srobinson@kabbage.com>

2:29 AM

but that number won't be good

Spencer Robinson <srobinson@kabbage.com>

2:30 AM

shouldn't be something Sam uses
N

Nipun Goel <ngoel@kabbage.com>

2:40 AM

yep walked them off of that.
N

Nipun Goel <ngoel@kabbage.com>

2:40 AM

nothing exciting about 40 might get approved!

Spencer Robinson <srobinson@kabbage.com>

2:58 AM

can we use 941 's?
N

Nipun Goel <ngoel@kabbage.com>

2:59 AM

in the absence of w-3?
N

Nipun Goel <ngoel@kabbage.com>

2:59 AM

itll get ya total wages

Spencer Robinson <srobinson@kabbage.com>

2:59 AM

maybe..still looking

Spencer Robinson <srobinson@kabbage.com>

2:59 AM

never mind

Spencer Robinson <srobinson@kabbage.com>

3:00 AM

found w3 and 940
N

Nipun Goel <ngoel@kabbage.com>

3:02 AM

hawt damn foot doctors
N

Nipun Goel <ngoel@kabbage.com>

3:02 AM

making fucking bank
N

Nipun Goel <ngoel@kabbage.com>

3:02 AM

lolz such egregious lies - 150K vs. 400K over 1 00K

Spencer Robinson <srobinson@kabbage.com>

3:02 AM

they totally deserve it...feet man...feet

Spencer Robinson <srobinson@kabbage.com>

3:10 AM

so if w3 box1 and 940 box 3 don't match...

Spencer Robinson <srobinson@kabbage.com>

3:10 AM

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what do we take?

Spencer Robinson <srobinson@kabbage.com>

3:11 AM

w3 box1 seems to be (940 box 3-940 box4)

Spencer Robinson <srobinson@kabbage.com>

3:12 AM

this seems contradictory to our formulas
N

Nipun Goel <ngoel@kabbage.com>

3:15AM

i've been taking w-3 box 1 as total wages
N

Nipun Goel <ngoel@kabbage.com>

3:15AM

as it's a direct reflection of the w-2's

Spencer Robinson <srobinson@kabbage.com>

3:15AM

cool...just need to make sure our directions are correct

Spencer Robinson <srobinson@kabbage.com>

3:16 AM

I'm not sure why they don't match

Spencer Robinson <srobinson@kabbage.com>

3:16 AM

logically they should

Spencer Robinson <srobinson@kabbage.com>

3:30 AM

so can we confirm that w3-box 1 is net of 940 box 4?
N

3:41AM
per syed - Yes because W-3 box 1 shouldnt have things like paid family leave, sick leave, etc

Nipun Goel <ngoel@kabbage.com>

3:41AM

lolz
N

Nipun Goel <ngoel@kabbage.com>

3:41AM

someone uploaded payroll total
N

Nipun Goel <ngoel@kabbage.com>

3:41AM

1/1/2010 - 12/31/2019
N

Nipun Goel <ngoel@kabbage.com>

3:41AM

amazing.

Spencer Robinson <srobinson@kabbage.com>

3:48AM

so I've got an account where w3 box1 and 940 box 3 + box 4 are still different...

Spencer Robinson <srobinson@kabbage.com>

3:59AM

i'm worried about our calcs

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Nipun Goel <ngoel@kabbage.com>

4:00 AM

syed taking a look at that one i think

Spencer Robinson <srobinson@kabbage.com>

4:09 AM

Nipun Goel <ngoel@kabbage.com>

4:28AM

so it's unrealistic we get thru all of these tonight...

Spencer Robinson <srobinson@kabbage.com>

4:28AM

ya...agreed

Spencer Robinson <srobinson@kabbage.com>

4:28AM

I have to start all over

Spencer Robinson <srobinson@kabbage.com>

4:28AM

...and I was only through 10
N

Nipun Goel <ngoel@kabbage.com>

4:28AM

oh geezus.
N

Nipun Goel <ngoel@kabbage.com>

4:29 AM

i've gotten thru 40 and highlighted ones where we're like materially off from borrower calc
N

Nipun Goel <ngoel@kabbage.com>

4:29 AM

i've surprisingly been able to match the 100k overage in most scenarios
S

Spencer Robinson <srobinson@kabbage.com>

4:29 AM

i didn't even look at that
Nipun Goel <ngoel@kabbage.com>

4:32 AM

...and these are the "good ones?"
S

Spencer Robinson <srobinson@kabbage.com>

4:32 AM

Nipun Goel <ngoel@kabbage.com>

4:35 AM

hahahaha - all this makes me think of is you as a huge anthony anderson fan.
N

Nipun Goel <ngoel@kabbage.com>

4:35 AM

which is way better than the giphy itself
S

Spencer Robinson <srobinson@kabbage.com>

4:35 AM

haha...i do think he's hilarious

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EXHIBIT 17

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0MB Control Number: 3245-0407
Expiration Date: 10/31/2020

CARES Act Section 1102 Lender AgreementNon-Bank and Non-Insured Depository Institution Lenders

_K_a _b_b_a_g_e_, _l_n_c_. _ _ _ _ _ _

("Lender") hereby agrees as a condition and in
consideration of authorization by the United States Small Business Administration ("SBA") and
the Department of Treasury for Lender to make Paycheck Protection Program SBA-guaranteed
financing available as part of the Coronavirus Aid, Relief, and Economic Securities Act
("CARES Act") (P.L. 116-136) to eligible recipients, as follows (the "Agreement"):

1. Lender Eligibility Requirements

Depository or non-depository financing providers may be eligible to participate as lenders in the
Paycheck Protection Program if they meet the criteria described in the attestations below.
Lender must attest to all of the statements in either Group A or Group B below.
Grouo A. Lender attests that it:
Is a depository or non-depository financing provider; AND
Originates, maintains, and services business loans or other commercial
financial receivables or participation interests; AND
Has a formal compliance program relating to, e.g., auditing and
compliance with aoolicable laws; AND
Applies the requirements under the BSA as a federally regulated financial
institution, or the BSA requirements of an equivalent federally regulated
financial institution; AND
Has been operating since at least February 15, 2019; AND
Has originated, maintained, and serviced more than $50 million in
business loans or other commercial financial receivables during a
consecutive 12 month period in the past 36 months.

Initial below

Grouo B. Lender attests that it is:
A service provider to an insured depository institution; AND
Has a contract to support such institution's lending activities in
accordance with 12 U.S.C. § 1867(c).

Initial below
SA

SBA Form 3507 (04/2020)

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Lender Information (Please Provide as Applicable):
Kabbage, Inc.
Institution Name
Atlanta, GA
Headquarters (City, State)
23-4438761
IRS Employer Identification No.
State of Incorporation or
Delaware
Organization
Primary Regulator in State of
n/a; see cover letter
Incorporation or Organization
Azba Habib
Primary Contact Name
678-805-7765
Phone Number
ahabib@kabbage.com
E-mail
www.kabbage.com
Website
State ID Number Issued by
n/a; see cover letter
Primary State Regulator
n/a; not publicly traded
Central Index Key (CIK)
Business loans or other commercial financial receivables originated and serviced:
Number of Loans
Originated during the year: $ Amount:
0
0
2019
0
0
2018
0
0
2017
Number of Loans
Serviced as of year-end: $ Amount:
Approx. $2.8B
Approx. 476,000
2019
Approx. $2.0B
Approx. 328,000
2018
Approx. $1.5B
Approx. 251,000
2017
Estimated number of small
Aprox., 103,000
businesses served in past 12
months through a loan, payment,
or other financial service customer
relationship
Explanation (if applicable) of
From March 2019 to February 2020, 103,000 small
estimated number of small
businesses received a loan or made a payment on a
businesses served (500 character
loan from Celtic Bank through a loan program
max)
supported and serviced by Kabbage as an agent
and service provider to Celtic Bank

Is the Lender a certified
No
Community Development
Financial Institution?
For service providers to insured
depository institutions under 12
U.S.C. § 1867(c), list the top 3
insured depository institutions for
which such services are provided
(by loan count)
I .a. Institution Name Celtic Bank
SBA Form 3507 (04/2020)

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l.b. RSSD ID 2998576
2.a. Institution Name
2.b. RSSD ID
3.a. Institution Name
3.b. RSSD ID
Is Lender subject to an
n/a; Kabbage does not have a primary federal
enforcement action by its primary regulator with respect to its role as a service provider
federal regulator that addresses
for Celtic Bank. See cover letter for additional
unsafe or unsound lending
details.
practices?
For lenders attesting to statements Yes; while not directly examined, the loan program
in Group B, within the past three
for which Kabbage acts as a service provider to
years, has Lender been examined
Celtic Bank has undergone an FDIC examination
by the Federal Reserve, OCC, or
each year for the past three years and Kabbage's
FDIC in connection with Lender's
activities as service provider have been within the
role as a service provider under 12
scope of such examination.
U.S.C. § 1867(c)?
Is Lender presently suspended,
No
debarred, proposed for debarment,
or declared ineligible by any
federal department or agency?
Is Lender presently the subject of No
any insolvency, bankruptcy or
creditor's rights proceedings?
Is Lender presently subject to any
No
indictment, or criminal or civil
fraud charges brought in any
i urisdiction?
Additional comments to clarify
Kabbage does not originate loans. It acts as an agent and service
provider to Celtic Bank, a federally-insured depository institution, in
any information above (750
connection with loans originated by Celtic Bank. Accordingly,
character max)
Kabbage is subject to regulation and examination by the FDIC,
Celtic Bank's primary federal regulator, under 12 U.S.C. § 1867(c),
but does not have a primary state regulator.

Please see additional information in the accompanying cover letter.

2. Application for Guaranty. This Agreement governs only "covered loans," duly approved
under delegated authority hereafter for guaranty by SBA, that are subject to the Paycheck
Protection Program under the CARES Act, section 7(a)(36) of the Small Business Act, any rules
that have been issued by SBA implementing the Paycheck Protection Program, or any other
applicable Loan Program Requirements, as defined in 13 CFR § 120.10, as amended from time
to time (collectively "PPP Loan Program Requirements").
3. Approval of Guaranty. Lender will process and approve covered loans under delegated
authority from SBA. Lender assumes all obligations, responsibilities, and requirements
associated with delegated processing of covered loans made under the Paycheck Protection

SBA Form 3507 (04/2020)

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Program. Any change in the terms or conditions stated in the loan authorization shall be made in
accordance with PPP Loan Program Requirements. For purposes of making covered loans to an
eligible recipient under the Paycheck Protection Program, Lender is responsible, to the extent set
forth in the PPP Loan Program Requirements, for all decisions concerning the eligibility
(including size) of a borrower for a covered loan. Lender may issue a covered loan approved
under PPP procedures without prior SBA review and approval of the processing and
underwriting of the loan by executing a PPP Authorization.
4. Closing and Disbursement of Covered Loans. Lender must close and disburse each covered
loan in accordance with the terms and conditions of the PPP Authorization and PPP Loan
Program Requirements. Lender must ensure that a note and all other Loan Documents (as
defined in this paragraph) and additional documents are properly executed and take such other
actions necessary to fulfill the requirements of the Paycheck Protection Program. SBA is
entitled, at any time, to examine and obtain copies of all notes, certifications and documentation
(herein, collectively, called "Loan Documents"), and all other records held by Lender which
relate to covered loans made pursuant to the Paycheck Protection Program.
5. Administration of Covered Loans. Lender will hold the Loan Documents and receive all
payments of principal and interest unless Lender is required to transfer or assign the note to SBA
or a third party at SBA' s direction. Lender must service and liquidate all covered loans made
under the Paycheck Protection Program in accordance with PPP Loan Program Requirements.
Except when SBA directs otherwise, all servicing actions will be the responsibility of Lender,
which must follow accepted standards of loan servicing employed by prudent lenders.
6. Purchase by SBA. By making any written demand that SBA purchase the guaranteed portion
of a loan, Lender will be deemed thereby to certify that the covered loan has been made, closed,
serviced, and liquidated in compliance with the Paycheck Protection Program and PPP Loan
Program Requirements. This Agreement will remain in full force and effect with respect to the
covered loan after any purchase.

7. Prohibited Fees. Other than a fixed interest rate of 1.0% on the covered loan, Lender is not
permitted to charge or receive any bonus, fee, prepayment penalty, commission or other payment
or benefit from a borrower in connection with the making or servicing of any covered loan under
the Paycheck Protection Program.
8. Termination.
A. A Lender's authority to make a covered loan under this Agreement will terminate on July 1,
2020. Either party may also terminate this Agreement upon not less than 10 days written
notice by certified mail to the other party. Termination will not affect the guaranty of any
covered loan previously authorized by SBA under the Paycheck Protection Program. It is
understood and agreed that Lender shall continue to comply with the Paycheck Protection
Program and PPP Loan Program Requirements with respect to any covered loan previously
authorized by SBA, including but not limited to the servicing and liquidation of such covered
loans. Termination by either party will not affect in any way Lender's continuing obligation
to comply with this Agreement, the Paycheck Protection Program, and all PPP Loan Program
Requirements with respect to any covered loan previously authorized by SBA under this
Agreement. If this Agreement is terminated by either Lender or SBA, Lender hereby agrees
that SBA may in its sole discretion transfer some or all of the covered loans and/or the
4
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servicing and liquidation of such covered loans and related fees or income to SBA or another
entity approved by SBA If SBA requires the transfer of Lender's covered loans, Lender
must cooperate with SBA to transfer responsibility for servicing and liquidating of such
covered loans.
B. The guaranty of any covered loan will be automatically terminated if Lender does not submit
to SBA a demand to purchase the guaranty or a request to extend the maturity within one
year after the maturity of the note.
9. Assignment. Lender may only assign or transfer its rights and obligations under this
Agreement with SBA's prior written consent, which SBA may withhold in its sole discretion.
10. Interpretation of this Agreement.
A This Agreement is subject to section 7(a)(36) of the Small Business Act, the Paycheck
Protection Program and PPP Loan Program Requirements and will be interpreted and
construed subject to, and to give full effect to, the broad scope of SBA's power and authority
under the Small Business Act and those requirements. Lender consents and agrees to all
rights and remedies available to SBA under the Small Business Act, the Paycheck Protection
Program and PPP Loan Program Requirements, as each of those are amended from time to
time, and any other applicable law.

B. To the best of its knowledge, Lender certifies that it is in compliance and will maintain
compliance with all applicable requirements of the Paycheck Protection Program and PPP
Loan Program Requirements.
C. Lender understands that SBA's rights and powers under the Small Business Act, the
Paycheck Protection Program and PPP Loan Program Requirements are in addition to, and
exist independent of, this Agreement, and that nothing in this Agreement may be asserted
against SBA under any circumstances to delay or prevent SBA's full exercise of its rights
under applicable law.
D. Lender agrees to hold SBA harmless for any action taken by SBA in enforcing this
Agreement, the Small Business Act, the Paycheck Protection Program and PPP Loan
Program Requirements against Lender for any covered loan made under this Agreement.
E. Lender agrees that any modification to this Agreement to be asserted against SBA or any
exemption to be claimed from any provision of the Small Business Act, the Paycheck
Protection Program, or PPP Loan Program Requirements is invalid, null, and void unless it is
made in writing by an official of SBA authorized to grant such modification or exemption
and was made after full disclosure to SBA of all material facts and circumstances.
F. This Agreement is to be interpreted under and construed in accordance with federal law.
G. This Agreement will inure to the benefit of, and be binding upon, the Lender's authorized
successors and assigns.
H. Lender understands that its execution and transmission to SBA of this Agreement does not
grant automatic enrollment in the Paycheck Protection Program. SBA and the Department of
5
SBA Form 3507 (04/2020)

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Treasury will evaluate Lender and this Agreement in accordance with the PPP Loan Program
Requirements and determine whether Lender has the necessary qualifications to process,
close, disburse, and service loans made with the SBA guarantee. SBA and the Department of
Treasury may request additional information from Lender before making a determination.
By signing below, I hereby certify that I have the authority to execute this Agreement for the
Lender on whose behalf I am signing, and that all representations made are true and correct to
the best of my knowledge. I further acknowledge that on behalf of the Lender I have also
submitted an Incumbency Certificate attached hereto. I further acknowledge that on behalf of the
Lender I have also submitted Lender's most recent fiscal year-end audited financial statements
attached hereto. I further acknowledge that any false statements made to the U.S. Small Business
Administration and Department of the Treasury can result in criminal prosecution under 18
U.S.C. 1001, 15 U.S.C. 645, and other provisions and imposition of civil money penalties under
31 U.S.C. 3729.
IN WITNESS WHEREOF, the undersigned has duly executed this Agreement.
Kabbage, Inc

Name of Lender
L. Scott Askins

4/9/20

Signature

Date

L. Scott Askins

Name and Title
ATTEST/WITNESS
, hereby represent and warrant that I am a duly
I, Azba Habib
elected or appointed Secretary or Officer of Kabbage, Inc.
(the
s
L.
Scott
Askin
is
duly
authorized
and
er")
and
that
"Lend
has the legal capacity to execute this Agreement on behalf of the Lender.

Signature:
Name and Title:

atl-2121-osx-510.local
Azba Habib, Assistant Secretary and Assistant General Counsel

Attachment 1: Incumbency Certificate
Attachment 2: Most recent fiscal year-end audited financial statements.
Transmit executed SBA Form 3507 (04-20) and attachments to
NFRLApplicationForPPP@sba.gov.

SBA Form 3507 (04/2020)

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'i{ 11

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SBA Loan Flows UX 6 replies Last reply 11 months ago

April 12th, 2020 v

Paul Bernardini 5:28 PM
More feedback from Twittersphere suggesting we're doubling up on the same data points:
https: //twitter.com/korl ando2251 /status/ 1249443040 516685 82 5?s= 20
Not That Karen @korlando2251
#TaxTwitter Has anyone been thru the @Kabbagelnc PPP loan app? Client is telling me
its asking for W3 box 1 wages (forwages) PLUS state & local taxes from the W3 boxes
17 & 19. T hiswould result in "doubling up" the EE's SIT & LITw/h in grosswages???
1J1 Twitter Apr 12th, 2020

Nipun Goel 5:29 PM
-" @Syed Ashekeen

r, Syed Ashekeen 5:44 PM

H Read through the treasury guidance again. It says Page 2 of 4,what counts as payroll compensation
https://home.treasury.gov/system/files/136/PPP%20Borrower%20Information%20Fact%20Sheet.pdf
State and local taxes assessed on compensation - which iswhywe are counting W-3 box 17 and Box 19
They included that AFTER saying in line 1 Salary, wages, commissions, or tips (capped at $100,000 on an annualized basis for each employee) Which is W-3 box 1
You are viewing # sba-loans, an archived channel

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� 11 SBA Loan Flows UX -

https://home.t, Apr il 12th, 2020 v .iles/136/PPP%20Bo
rrower%201nformation%20Fact%20Sheet.pdf

Thread
Bsba-loans (archived)

They included that AFTER saying in line 1 Salary, wages,

�

maybe it is doubling up (IDK). But, we are following Treasury guidance which includes both of these items
3 replies

r, Syed Ashekeen 5:46 PM

•

� Do I disagree with her? No, I think given that I am not a CPA, I am humble enough to think she may be right and

is why we are counting W-3 box 17 and Box 19

annualized basis for each employee) - Which is W-3 box

...

r, Syed Ashekeen Apr 12th. 2020 at 5:46 PM

State and local taxes assessed on compensation - which

commissions, or tips (capped at $100,000 on an

Page 41 of 62

Spencer Robinson 11 months ago
form instructions do imply she might be right:
Spencer Robinson 11 months ago

J Boxes 16 through 19 (not applicable to Forms W-2AS, W-2CM, W-2GU, and W-2VI). Enter the total of state/local
wages and income tax shown in their corresponding boxes on the Forms W-2 included with this Form W-3. If the

� Do I disagree with her? No, I think given that I am not a

Forms W-2 show amounts from more than one state or locality, report them as one sum in the appropriate box on

CPA, I am humble enough to think she may be right and

Form W-3. Verify that the amount reported in each box is an accurate total of the Forms W-2. Federal employers

maybe it is doubling up (IDK). But, we are following

reporting income taxes paid to the CNMI under the 5517 agreement, enter the total of CNMI wages on the Forms
W-2 in box 16. Enter the total of income taxes shown on the Forms W-2 paid to the CNMI in box 17. See Federal

Treasury guidance which includes both of these items

y 3 replies Last reply 11 months ago

employers in the CNMI, earlier, for more information.

'' ·• more likely treasury running fast and making rules that
don't fully make sense, not like we haven't seen that this
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archived channel

Close Channel

Spencer Robinson 11 months ago

J if it amounts to the sum of W-2 taxes...then this wouldn't be employer paid taxes...but I'm also not a CPA. ..maybe
r,

David McGowan 5:47 PM

we should talk to one

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•
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Search Kabbage

#sba-loans
� 11 SBA Loan Flows UX Which is W-3 box 1

April 12th, 2020 v

F-. Syed Ashekeen 5:46 PM

,...... Do I disagree with her? No, I think given that I am not a CPA, I am humble enough to think she may be right and maybe it is doubling up (IDK).
But, we are following Treasury guidance which includes both of these items

y- 3 replies Last reply 11 months ago

David McGowan 5:47 PM
• • more likely treasury running fast and making rules that don't fully make sense, not like we haven't seen that this last 2 weeks at all
:_. 2

£. 5

we will get some blame for doing this to the letter when what we are getting from the gov a lot of times right now still fully doesn't make
sense, then they do their daily press conferences saying it's all good and working perfect, so that's fun from a support standpoint, I'm sorry
April 13th, 2020 v
• Mike Lopapa ... 8:39 AM
� https://www.pymnts.com/disbursements/2020/paypal-approved-to-process-smb-ppp-loans/

■ PYMNTS.com

PayPal Approved To Process SMB PPP Loans I PYMNTS.com
PayPal has become one of the iirst non-bank institutions allowed to distribute loans to
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As of April 23, 2020
PAYCHECK PROTECTION PROGRAM LOANS
Frequently Asked Questions (FAQs)

The Small Business Administration (SBA), in consultation with the Department of the Treasury,
intends to provide timely additional guidance to address borrower and lender questions
concerning the implementation of the Paycheck Protection Program (PPP), established by section
1102 of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act or the Act). This
document will be updated on a regular basis.
Borrowers and lenders may rely on the guidance provided in this document as SBA’s
interpretation of the CARES Act and of the Paycheck Protection Program Interim Final Rule
(“PPP Interim Final Rule”) (link). The U.S. government will not challenge lender PPP actions
that conform to this guidance,1 and to the PPP Interim Final Rule and any subsequent rulemaking
in effect at the time.
1. Question: Paragraph 3.b.iii of the PPP Interim Final Rule states that lenders must
“[c]onfirm the dollar amount of average monthly payroll costs for the preceding calendar
year by reviewing the payroll documentation submitted with the borrower’s application.”
Does that require the lender to replicate every borrower’s calculations?
Answer: No. Providing an accurate calculation of payroll costs is the responsibility of
the borrower, and the borrower attests to the accuracy of those calculations on the
Borrower Application Form. Lenders are expected to perform a good faith review, in a
reasonable time, of the borrower’s calculations and supporting documents concerning
average monthly payroll cost. For example, minimal review of calculations based on a
payroll report by a recognized third-party payroll processor would be reasonable. In
addition, as the PPP Interim Final Rule indicates, lenders may rely on borrower
representations, including with respect to amounts required to be excluded from payroll
costs.
If the lender identifies errors in the borrower’s calculation or material lack of
substantiation in the borrower’s supporting documents, the lender should work with the
borrower to remedy the issue.2
2. Question: Are small business concerns (as defined in section 3 of the Small Business
Act, 15 U.S.C. 632) required to have 500 or fewer employees to be eligible borrowers in
the PPP?
Answer: No. Small business concerns can be eligible borrowers even if they have more
than 500 employees, as long as they satisfy the existing statutory and regulatory
definition of a “small business concern” under section 3 of the Small Business Act, 15
U.S.C. 632. A business can qualify if it meets the SBA employee-based or revenue1

This document does not carry the force and effect of law independent of the statute and regulations on which it is
based.
2
Question 1 published April 3, 2020.

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based size standard corresponding to its primary industry. Go to www.sba.gov/size for
the industry size standards.
Additionally, a business can qualify for the Paycheck Protection Program as a small
business concern if it met both tests in SBA’s “alternative size standard” as of March 27,
2020: (1) maximum tangible net worth of the business is not more than $15 million; and
(2) the average net income after Federal income taxes (excluding any carry-over losses)
of the business for the two full fiscal years before the date of the application is not more
than $5 million.
A business that qualifies as a small business concern under section 3 of the Small
Business Act, 15 U.S.C. 632, may truthfully attest to its eligibility for PPP loans on the
Borrower Application Form, unless otherwise ineligible.
3. Question: Does my business have to qualify as a small business concern (as defined in
section 3 of the Small Business Act, 15 U.S.C. 632) in order to participate in the PPP?
Answer: No. In addition to small business concerns, a business is eligible for a PPP
loan if the business has 500 or fewer employees whose principal place of residence is in
the United States, or the business meets the SBA employee-based size standards for the
industry in which it operates (if applicable). Similarly, PPP loans are also available for
qualifying tax-exempt nonprofit organizations described in section 501(c)(3) of the
Internal Revenue Code (IRC), tax-exempt veterans organization described in section
501(c)(19) of the IRC, and Tribal business concerns described in section 31(b)(2)(C) of
the Small Business Act that have 500 or fewer employees whose principal place of
residence is in the United States, or meet the SBA employee-based size standards for the
industry in which they operate.
4. Question: Are lenders required to make an independent determination regarding
applicability of affiliation rules under 13 C.F.R. 121.301(f) to borrowers?
Answer: No. It is the responsibility of the borrower to determine which entities (if any)
are its affiliates and determine the employee headcount of the borrower and its affiliates.
Lenders are permitted to rely on borrowers’ certifications.
5. Question: Are borrowers required to apply SBA’s affiliation rules under 13 C.F.R.
121.301(f)?
Answer: Yes. Borrowers must apply the affiliation rules set forth in SBA’s Interim
Final Rule on Affiliation. A borrower must certify on the Borrower Application Form
that the borrower is eligible to receive a PPP loan, and that certification means that the
borrower is a small business concern as defined in section 3 of the Small Business Act
(15 U.S.C. 632), meets the applicable SBA employee-based or revenue-based size
standard, or meets the tests in SBA’s alternative size standard, after applying the
affiliation rules, if applicable. SBA’s existing affiliation exclusions apply to the PPP,
including, for example the exclusions under 13 CFR 121.103(b)(2).
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6. Question: The affiliation rule based on ownership (13 C.F.R. 121.301(f)(1)) states that
SBA will deem a minority shareholder in a business to control the business if the
shareholder has the right to prevent a quorum or otherwise block action by the board of
directors or shareholders. If a minority shareholder irrevocably gives up those rights, is it
still considered to be an affiliate of the business?
Answer: No. If a minority shareholder in a business irrevocably waives or relinquishes
any existing rights specified in 13 C.F.R. 121.301(f)(1), the minority shareholder would
no longer be an affiliate of the business (assuming no other relationship that triggers the
affiliation rules).
7. Question: The CARES Act excludes from the definition of payroll costs any employee
compensation in excess of an annual salary of $100,000. Does that exclusion apply to all
employee benefits of monetary value?
Answer: No. The exclusion of compensation in excess of $100,000 annually applies
only to cash compensation, not to non-cash benefits, including:
 employer contributions to defined-benefit or defined-contribution retirement
plans;
 payment for the provision of employee benefits consisting of group health care
coverage, including insurance premiums; and
 payment of state and local taxes assessed on compensation of employees.
8. Question: Do PPP loans cover paid sick leave?
Answer: Yes. PPP loans covers payroll costs, including costs for employee vacation,
parental, family, medical, and sick leave. However, the CARES Act excludes qualified
sick and family leave wages for which a credit is allowed under sections 7001 and 7003
of the Families First Coronavirus Response Act (Public Law 116–127). Learn more
about the Paid Sick Leave Refundable Credit here.
9. Question: My small business is a seasonal business whose activity increases from April
to June. Considering activity from that period would be a more accurate reflection of my
business’s operations. However, my small business was not fully ramped up on February
15, 2020. Am I still eligible?
Answer: In evaluating a borrower’s eligibility, a lender may consider whether a seasonal
borrower was in operation on February 15, 2020 or for an 8-week period between
February 15, 2019 and June 30, 2019.
10. Question: What if an eligible borrower contracts with a third-party payer such as a
payroll provider or a Professional Employer Organization (PEO) to process payroll and
report payroll taxes?
Answer: SBA recognizes that eligible borrowers that use PEOs or similar payroll
providers are required under some state registration laws to report wage and other data on
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the Employer Identification Number (EIN) of the PEO or other payroll provider. In these
cases, payroll documentation provided by the payroll provider that indicates the amount
of wages and payroll taxes reported to the IRS by the payroll provider for the borrower’s
employees will be considered acceptable PPP loan payroll documentation. Relevant
information from a Schedule R (Form 941), Allocation Schedule for Aggregate Form 941
Filers, attached to the PEO’s or other payroll provider’s Form 941, Employer’s Quarterly
Federal Tax Return, should be used if it is available; otherwise, the eligible borrower
should obtain a statement from the payroll provider documenting the amount of wages
and payroll taxes. In addition, employees of the eligible borrower will not be considered
employees of the eligible borrower’s payroll provider or PEO.
11. Question: May lenders accept signatures from a single individual who is authorized to
sign on behalf of the borrower?
Answer: Yes. However, the borrower should bear in mind that, as the Borrower
Application Form indicates, only an authorized representative of the business seeking a
loan may sign on behalf of the business. An individual’s signature as an “Authorized
Representative of Applicant” is a representation to the lender and to the U.S. government
that the signer is authorized to make the certifications, including with respect to the
applicant and each owner of 20% or more of the applicant’s equity, contained in the
Borrower Application Form. Lenders may rely on that representation and accept a single
individual’s signature on that basis.
12. Question: I need to request a loan to support my small business operations in light of
current economic uncertainty. However, I pleaded guilty to a felony crime a very long
time ago. Am I still eligible for the PPP?
Answer: Yes. Businesses are only ineligible if an owner of 20 percent or more of the
equity of the applicant is presently incarcerated, on probation, on parole; subject to an
indictment, criminal information, arraignment, or other means by which formal criminal
charges are brought in any jurisdiction; or, within the last five years, for any felony, has
been convicted; pleaded guilty; pleaded nolo contendere; been placed on pretrial
diversion; or been placed on any form of parole or probation (including probation before
judgment).
13. Question: Are lenders permitted to use their own online portals and an electronic form
that they create to collect the same information and certifications as in the Borrower
Application Form, in order to complete implementation of their online portals?
Answer: Yes. Lenders may use their own online systems and a form they establish that
asks for the same information (using the same language) as the Borrower Application
Form. Lenders are still required to send the data to SBA using SBA’s interface.
14. Question: What time period should borrowers use to determine their number of
employees and payroll costs to calculate their maximum loan amounts?

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Answer: In general, borrowers can calculate their aggregate payroll costs using data
either from the previous 12 months or from calendar year 2019. For seasonal businesses,
the applicant may use average monthly payroll for the period between February 15, 2019,
or March 1, 2019, and June 30, 2019. An applicant that was not in business from
February 15, 2019 to June 30, 2019 may use the average monthly payroll costs for the
period January 1, 2020 through February 29, 2020.
Borrowers may use their average employment over the same time periods to determine
their number of employees, for the purposes of applying an employee-based size
standard. Alternatively, borrowers may elect to use SBA’s usual calculation: the average
number of employees per pay period in the 12 completed calendar months prior to the
date of the loan application (or the average number of employees for each of the pay
periods that the business has been operational, if it has not been operational for 12
months).
15. Question: Should payments that an eligible borrower made to an independent contractor
or sole proprietor be included in calculations of the eligible borrower’s payroll costs?
Answer: No. Any amounts that an eligible borrower has paid to an independent
contractor or sole proprietor should be excluded from the eligible business’s payroll
costs. However, an independent contractor or sole proprietor will itself be eligible for a
loan under the PPP, if it satisfies the applicable requirements.
16. Question: How should a borrower account for federal taxes when determining its
payroll costs for purposes of the maximum loan amount, allowable uses of a PPP loan,
and the amount of a loan that may be forgiven?
Answer: Under the Act, payroll costs are calculated on a gross basis without regard to
(i.e., not including subtractions or additions based on) federal taxes imposed or withheld,
such as the employee’s and employer’s share of Federal Insurance Contributions Act
(FICA) and income taxes required to be withheld from employees. As a result, payroll
costs are not reduced by taxes imposed on an employee and required to be withheld by
the employer, but payroll costs do not include the employer’s share of payroll tax. For
example, an employee who earned $4,000 per month in gross wages, from which $500 in
federal taxes was withheld, would count as $4,000 in payroll costs. The employee would
receive $3,500, and $500 would be paid to the federal government. However, the
employer-side federal payroll taxes imposed on the $4,000 in wages are excluded from
payroll costs under the statute.3
The definition of “payroll costs” in the CARES Act, 15 U.S.C. 636(a)(36)(A)(viii), excludes “taxes imposed or
withheld under chapters 21, 22, or 24 of the Internal Revenue Code of 1986 during the covered period,” defined as
February 15, 2020, to June 30, 2020. As described above, the SBA interprets this statutory exclusion to mean that
payroll costs are calculated on a gross basis, without subtracting federal taxes that are imposed on the employee or
withheld from employee wages. Unlike employer-side payroll taxes, such employee-side taxes are ordinarily
expressed as a reduction in employee take-home pay; their exclusion from the definition of payroll costs means
payroll costs should not be reduced based on taxes imposed on the employee or withheld from employee wages.
This interpretation is consistent with the text of the statute and advances the legislative purpose of ensuring workers
3

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17. Question: I filed or approved a loan application based on the version of the PPP Interim
Final Rule published on April 2, 2020. Do I need to take any action based on the updated
guidance in these FAQs?
Answer: No. Borrowers and lenders may rely on the laws, rules, and guidance available
at the time of the relevant application. However, borrowers whose previously submitted
loan applications have not yet been processed may revise their applications based on
clarifications reflected in these FAQs.
18. Question: Are PPP loans for existing customers considered new accounts for FinCEN
Rule CDD purposes? Are lenders required to collect, certify, or verify beneficial
ownership information in accordance with the rule requirements for existing customers?
Answer: If the PPP loan is being made to an existing customer and the necessary
information was previously verified, you do not need to re-verify the information.
Furthermore, if federally insured depository institutions and federally insured credit
unions eligible to participate in the PPP program have not yet collected beneficial
ownership information on existing customers, such institutions do not need to collect and
verify beneficial ownership information for those customers applying for new PPP loans,
unless otherwise indicated by the lender’s risk-based approach to BSA compliance.4
19. Question: Do lenders have to use a promissory note provided by SBA or may they use
their own?
Answer: Lenders may use their own promissory note or an SBA form of promissory
note.
20. Question: The amount of forgiveness of a PPP loan depends on the borrower’s payroll
costs over an eight-week period; when does that eight-week period begin?
Answer: The eight-week period begins on the date the lender makes the first
disbursement of the PPP loan to the borrower. The lender must make the first
disbursement of the loan no later than ten calendar days from the date of loan approval.5
21. Question: Do lenders need a separate SBA Authorization document to issue PPP loans?
Answer: No. A lender does not need a separate SBA Authorization for SBA to
guarantee a PPP loan. However, lenders must have executed SBA Form 2484 (the
remain paid and employed. Further, because the reference period for determining a borrower’s maximum loan
amount will largely or entirely precede the period from February 15, 2020, to June 30, 2020, and the period during
which borrowers will be subject to the restrictions on allowable uses of the loans may extend beyond that period, for
purposes of the determination of allowable uses of loans and the amount of loan forgiveness, this statutory exclusion
will apply with respect to such taxes imposed or withheld at any time, not only during such period.
4
Questions 2 – 18 published April 6, 2020.
5
Questions 19 – 20 published April 8, 2020.

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Lender Application Form for the Paycheck Protection Program)6 to issue PPP loans and
receive a loan number for each originated PPP loan. Lenders may include in their
promissory notes for PPP loans any terms and conditions, including relating to
amortization and disclosure, that are not inconsistent with Sections 1102 and 1106 of the
CARES Act, the PPP Interim Final Rule and guidance, and SBA Form 2484.
22. Question: I am a non-bank lender that meets all applicable criteria of the PPP Interim
Final Rule. Will I be automatically enrolled as a PPP lender? What criteria will SBA
and the Treasury Department use to assess whether to approve my application to
participate as a PPP lender?
Answer: We encourage lenders that are not currently 7(a) lenders to apply in order to
increase the scope of PPP lending options and the speed with which PPP loans can be
disbursed to help small businesses across America. We recognize that financial
technology solutions can promote efficiency and financial inclusion in implementing the
PPP. Applicants should submit SBA Form 3507 and the relevant attachments to
NFRLApplicationForPPP@sba.gov. Submission of the SBA Form 3507 does not result
in automatic enrollment in the PPP. SBA and the Treasury Department will evaluate
each application from a non-bank or non-insured depository institution lender and
determine whether the applicant has the necessary qualifications to process, close,
disburse, and service PPP loans made with SBA’s guarantee. SBA may request
additional information from the applicant before making a determination.
23. Question: How do the $10 million cap and affiliation rules work for franchises?
Answer: If a franchise brand is listed on the SBA Franchise Directory, each of its
franchisees that meets the applicable size standard can apply for a PPP loan. (The
franchisor does not apply on behalf of its franchisees.) The $10 million cap on PPP loans
is a limit per franchisee entity, and each franchisee is limited to one PPP loan.
Franchise brands that have been denied listing on the Directory because of affiliation
between franchisor and franchisee may request listing to receive PPP loans. SBA will
not apply affiliation rules to a franchise brand requesting listing on the Directory to
participate in the PPP, but SBA will confirm that the brand is otherwise eligible for
listing on the Directory.
24. Question: How do the $10 million cap and affiliation rules work for hotels and
restaurants (and any business assigned a North American Industry Classification System
(NAICS) code beginning with 72)?
Answer: Under the CARES Act, any single business entity that is assigned a NAICS
code beginning with 72 (including hotels and restaurants) and that employs not more than
500 employees per physical location is eligible to receive a PPP loan.

This requirement is satisfied by a lender when the lender completes the process of submitting a loan through the ETran system; no transmission or retention of a physical copy of Form 2484 is required.

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In addition, SBA’s affiliation rules (13 CFR 121.103 and 13 CFR 121.301) do not apply
to any business entity that is assigned a NAICS code beginning with 72 and that employs
not more than a total of 500 employees. As a result, if each hotel or restaurant location
owned by a parent business is a separate legal business entity, each hotel or restaurant
location that employs not more than 500 employees is permitted to apply for a separate
PPP loan provided it uses its unique EIN.
The $10 million maximum loan amount limitation applies to each eligible business entity,
because individual business entities cannot apply for more than one loan. The following
examples illustrate how these principles apply.
Example 1. Company X directly owns multiple restaurants and has no affiliates.
 Company X may apply for a PPP loan if it employs 500 or fewer employees per
location (including at its headquarters), even if the total number of employees
employed across all locations is over 500.
Example 2. Company X wholly owns Company Y and Company Z (as a result,
Companies X, Y, and Z are all affiliates of one another). Company Y and Company Z
each own a single restaurant with 500 or fewer employees.
 Company Y and Company Z can each apply for a separate PPP loan, because
each has 500 or fewer employees. The affiliation rules do not apply, because
Company Y and Company Z each has 500 or fewer employees and is in the food
services business (with a NAICS code beginning with 72).
Example 3. Company X wholly owns Company Y and Company Z (as a result,
Companies X, Y, and Z are all affiliates of one another). Company Y owns a restaurant
with 400 employees. Company Z is a construction company with 400 employees.
 Company Y is eligible for a PPP loan because it has 500 or fewer employees.
The affiliation rules do not apply to Company Y, because it has 500 or fewer
employees and is in the food services business (with a NAICS code beginning
with 72).
 The waiver of the affiliation rules does not apply to Company Z, because
Company Z is in the construction industry. Under SBA’s affiliation rules, 13
CFR 121.301(f)(1) and (3), Company Y and Company Z are affiliates of one
another because they are under the common control of Company X, which wholly
owns both companies. This means that the size of Company Z is determined by
adding its employees to those of Companies X and Y. Therefore, Company Z is
deemed to have more than 500 employees, together with its affiliates. However,
Company Z may be eligible to receive a PPP loan as a small business concern if
it, together with Companies X and Y, meets SBA’s other applicable size
standards,” as explained in FAQ #2.
25. Question: Does the information lenders are required to collect from PPP applicants
regarding every owner who has a 20% or greater ownership stake in the applicant
business (i.e., owner name, title, ownership %, TIN, and address) satisfy a lender’s
obligation to collect beneficial ownership information (which has a 25% ownership
threshold) under the Bank Secrecy Act?
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Answer:
For lenders with existing customers: With respect to collecting beneficial ownership
information for owners holding a 20% or greater ownership interest, if the PPP loan is
being made to an existing customer and the lender previously verified the necessary
information, the lender does not need to re-verify the information. Furthermore, if
federally insured depository institutions and federally insured credit unions eligible to
participate in the PPP program have not yet collected such beneficial ownership
information on existing customers, such institutions do not need to collect and verify
beneficial ownership information for those customers applying for new PPP loans, unless
otherwise indicated by the lender’s risk-based approach to Bank Secrecy Act (BSA)
compliance.
For lenders with new customers: For new customers, the lender’s collection of the
following information from all natural persons with a 20% or greater ownership stake in
the applicant business will be deemed to satisfy applicable BSA requirements and
FinCEN regulations governing the collection of beneficial ownership information: owner
name, title, ownership %, TIN, address, and date of birth. If any ownership interest of
20% or greater in the applicant business belongs to a business or other legal entity,
lenders will need to collect appropriate beneficial ownership information for that entity.
If you have questions about requirements related to beneficial ownership, go to
https://www.fincen.gov/resources/statutes-and-regulations/cdd-final-rule. Decisions
regarding further verification of beneficial ownership information collected from new
customers should be made pursuant to the lender’s risk-based approach to BSA
compliance.7
26. Question: SBA regulations require approval by SBA’s Standards of Conduct Committee
(SCC) for SBA Assistance, other than disaster assistance, to an entity, if its sole
proprietor, partner, officer, director, or stockholder with a 10 percent or more interest is:
a current SBA employee; a Member of Congress; an appointed official or employee of
the legislative or judicial branch; a member or employee of an SBA Advisory Council or
SCORE volunteer; or a household member of any of the preceding individuals. Do these
entities need the approval of the SCC in order to be eligible for a PPP loan?
Answer: The SCC has authorized a blanket approval for PPP loans to such entities so
that further action by the SCC is not necessary in the PPP program.
27. Question: SBA regulations require a written statement of no objection by the pertinent
Department or military service before it provides any SBA Assistance, other than disaster
loans, to an entity, if its sole proprietor, partner, officer, director, or stockholder with a 10
percent or more interest, or if a household member of any of the preceding individuals, is
an employee of another Government Department or Agency having a grade of at least
GS-13 or its equivalent. Does this requirement apply to PPP loans?

Questions 21 – 25 published April 13, 2020.

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Answer: No. The SCC has determined that a written statement of no objection is not
required from another Government Department or Agency for PPP loans.
28. Question: Is a lender permitted to submit a PPP loan application to SBA through E-Tran
before the lender has fulfilled its responsibility to review the required borrower
documentation and calculation of payroll costs?
Answer: No. Before a lender submits a PPP loan through E-Tran, the lender must have
collected the information and certifications contained in the Borrower Application Form
and the lender must have fulfilled its obligations set forth in paragraphs 3.b.(i)-(iii) of the
PPP Interim Final Rule. Please refer to the Interim Final Rule and FAQ 1 for more
information on the lender’s responsibility regarding confirmation of payroll costs.
Lenders who did not understand that these steps are required before submission to E-Tran
need not withdraw applications submitted to E-Tran before April 14, 2020, but must
fulfill lender responsibilities with respect to those applications as soon as practicable and
no later than loan closing.8
29. Question: Can lenders use scanned copies of documents or E-signatures or E-consents
permitted by the E-sign Act?
Answer: Yes. All PPP lenders may accept scanned copies of signed loan applications
and documents containing the information and certifications required by SBA Form 2483
and the promissory note used for the PPP loan. Additionally, lenders may also accept
any form of E-consent or E-signature that complies with the requirements of the
Electronic Signatures in Global and National Commerce Act (P.L. 106-229).
If electronic signatures are not feasible, when obtaining a wet ink signature without inperson contact, lenders should take appropriate steps to ensure the proper party has
executed the document.
This guidance does not supersede signature requirements imposed by other applicable
law, including by the lender’s primary federal regulator.9
30. Question: Can a lender sell a PPP loan into the secondary market?
Answer: Yes. A PPP loan may be sold into the secondary market at any time after the
loan is fully disbursed. A secondary market sale of a PPP loan does not require SBA
approval. A PPP loan sold into the secondary market is 100% SBA guaranteed. A PPP
loan may be sold on the secondary market at a premium or a discount to par value.10

Questions 26 – 28 published April 14, 2020.
Question 29 published April 15, 2020.
10
Question 30 published April 17, 2020.
8
9

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31. Question: Do businesses owned by large companies with adequate sources of liquidity
to support the business’s ongoing operations qualify for a PPP loan?
Answer: In addition to reviewing applicable affiliation rules to determine eligibility, all
borrowers must assess their economic need for a PPP loan under the standard established
by the CARES Act and the PPP regulations at the time of the loan application. Although
the CARES Act suspends the ordinary requirement that borrowers must be unable to
obtain credit elsewhere (as defined in section 3(h) of the Small Business Act), borrowers
still must certify in good faith that their PPP loan request is necessary. Specifically,
before submitting a PPP application, all borrowers should review carefully the required
certification that “[c]urrent economic uncertainty makes this loan request necessary to
support the ongoing operations of the Applicant.” Borrowers must make this certification
in good faith, taking into account their current business activity and their ability to access
other sources of liquidity sufficient to support their ongoing operations in a manner that is
not significantly detrimental to the business. For example, it is unlikely that a public
company with substantial market value and access to capital markets will be able to make
the required certification in good faith, and such a company should be prepared to
demonstrate to SBA, upon request, the basis for its certification.
Lenders may rely on a borrower’s certification regarding the necessity of the loan
request. Any borrower that applied for a PPP loan prior to the issuance of this guidance
and repays the loan in full by May 7, 2020 will be deemed by SBA to have made the
required certification in good faith.11

Question 31 published April 23, 2020.

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