SBA Notice 5000-20076: First Draw PPP Loan Increases
Archived source: PPP Procedural Notice First Draw Paycheck Protection Program Loan Incr 7ca7056ed2131f50. Captured from home.treasury.gov.
Cited in: Dianna L. Seaborn
Full text
SBA Procedural Notice
TO: All SBA Employees and Paycheck Protection CONTROL NO.: 5000-20076
Program Lenders
EFFECTIVE: January 13, 2021
SUBJECT: First Draw Paycheck Protection
Program Loan Increases After Enactment of the
Economic Aid Act
The Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act (Economic Aid
Act or Act) (Pub. L. 116-260) changed the existing Paycheck Protection Program (PPP) rules
regarding increases to PPP loans. Under previous PPP rules, a First Draw PPP Loan could not
be increased unless the loan was made to a partnership or seasonal employer and the Lender
approved the increase before the Lender submitted the initial SBA Form 1502 (1502) report for
the loan. Section 312 of the Economic Aid Act provides for additional narrow circumstances
under which certain eligible borrowers that received a First Draw PPP Loan may reapply for a
First Draw PPP Loan or request an increase in a First Draw PPP Loan that was approved on or
before August 8, 2020. The purpose of this Notice is to guide SBA employees and Lenders on
the procedures for such reapplications or requests for increases for a First Draw PPP Loan that
was approved on or before August 8, 2020. This Notice also discusses how Lenders can obtain
the additional processing fee that is due on the increased loan amount (if not previously paid by
SBA), and how Lenders can obtain a processing fee on a reapplication.
The interim final rule titled “Business Loan Program Temporary Changes; Paycheck Protection
Program as Amended by Economic Aid Act” (the “Consolidated IFR”) posted on SBA’s website
on January 6, 2021, describes the additional narrow circumstances under which certain eligible
borrowers may reapply for a new First Draw PPP Loan or request an increase to a First Draw
PPP Loan approved on or before August 8, 2020. First Draw PPP Loan increases can be made
only by the Lender of Record, 1 and only under the circumstances outlined in this Notice. No
1
As used herein, the “Lender of Record” is the Lender that is reflected on SBA’s system as the
current owner of the First Draw PPP Loan. If the First Draw PPP Loan was sold after loan
origination, the Lender of Record is the Lender that purchased the loan. As used herein, the
“Originating Lender” is the Lender that processed the First Draw PPP Loan application and
received the SBA loan number.
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other First Draw PPP Loan increases are allowed. If SBA has remitted a forgiveness payment to
the Lender on a First Draw PPP Loan, no loan increases or reapplications are allowed. 2
Partnerships:
If a partnership received a First Draw PPP Loan that only included amounts necessary for payroll
costs of the partnership’s employees and other eligible operating expenses, but did not include
any amount for partner compensation, and SBA has not remitted a forgiveness payment to the
Lender on that loan, the Lender of Record may electronically submit a request through SBA’s
E-Tran Servicing site (E-Tran) to increase the First Draw PPP Loan amount to include
appropriate partner compensation, even if the loan has been fully disbursed and even if the
Lender’s first 1502 report to SBA on the First Draw PPP Loan has already been submitted. 3 The
amount of the increase may not exceed the maximum loan amount to which the borrower is
entitled under PPP rules, and in no event can the increased loan amount exceed the maximum
PPP loan amount ($10 million for an individual borrower or $20 million for a corporate group).
Additionally, the borrower must provide the Lender of Record with all required documentation
to support the calculation of the increase to include partner compensation, and the Lender must
comply with the loan amount underwriting requirements in paragraph C.3. of the Consolidated
IFR. Any request for an increase must be submitted electronically in E-Tran by the Lender of
Record on or before March 31, 2021, and is subject to the availability of funds. SBA will pay an
additional processing fee to the Originating Lender on the amount of the increase.
Seasonal Employers:
Section 336 of the Economic Aid Act revised the method by which a seasonal employer may
determine its maximum loan amount for purposes of the PPP to allow the seasonal employer to
use the average total monthly payments for payroll for any 12-week period selected by the
seasonal employer beginning February 15, 2019, and ending February 15, 2020. 4 If a seasonal
employer received a First Draw PPP Loan and SBA has not remitted a forgiveness payment to
the Lender on that loan, the seasonal employer would be eligible for an increase if application of
the methodology in Section 336 of the Economic Aid Act results in the calculation of a higher
loan amount. In that case, the Lender of Record may electronically submit a request through
E-Tran to increase the seasonal employer’s First Draw PPP Loan amount, even if the loan has
been fully disbursed and even if the Lender’s first 1502 report to SBA on the PPP loan has
already been submitted. The amount of the increase may not exceed the maximum loan amount
to which the borrower is entitled under PPP rules, and in no event can the increased loan amount
exceed the maximum PPP loan amount ($10 million for an individual borrower or $20 million
for a corporate group). Additionally, the borrower must provide the Lender of Record with all
required documentation to support the calculation of the increase due to the newly-selected
12 week period, and the Lender must comply with the loan amount underwriting requirements in
paragraph C.3. of the Consolidated IFR. Any request for an increase must be submitted
2
However, the borrower may be eligible for a Second Draw PPP Loan.
3
See subsection D.6. of the Consolidated IFR.
4
See subsection D.7. of the Consolidated IFR.
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electronically in E-Tran by the Lender of Record on or before March 31, 2021, and is subject to
the availability of funds. SBA will pay an additional processing fee to the Originating Lender on
the amount of the increase.
Farmers and Ranchers:
Section 313 of the Economic Aid Act changed the calculation of the maximum loan amount for
certain farmers and ranchers. This calculation is described in subsection B.4.d. of the
Consolidated IFR. If an eligible farmer or rancher received a First Draw PPP Loan and SBA has
not remitted a forgiveness payment to the Lender on that loan, and such farmer or rancher would
be eligible for a higher maximum loan amount based on the formula described in subsection
B.4.d. of the Consolidated IFR, the Lender of Record may electronically submit a request
through E-Tran to increase the First Draw PPP Loan amount, even if the loan has been fully
disbursed and even if the Lender’s first 1502 report to SBA on the PPP loan has already been
submitted. The amount of the increase may not exceed the maximum loan amount to which the
borrower is entitled under PPP rules, and in no event can the increased loan amount exceed the
maximum PPP loan amount ($10 million for an individual borrower). Additionally, the
borrower must provide the Lender of Record with all required documentation to support the
calculation of the increase under the new methodology, and the Lender must comply with the
loan amount underwriting requirements in paragraph C.3. of the Consolidated IFR. Any request
for an increase must be submitted electronically in E-Tran by the Lender of Record on or before
March 31, 2021, and is subject to the availability of funds. SBA will pay an additional
processing fee to the Originating Lender on the amount of the increase.
Other PPP Borrowers Eligible for a PPP Loan Increase (or Reapplication):
1. Eligible Borrowers that fully repaid a First Draw PPP Loan before December 27, 2020:
If an eligible borrower received a First Draw PPP Loan, the Lender reported to SBA before
December 27, 2020 that the borrower fully repaid the loan, and SBA has not remitted a
forgiveness payment to the Lender on that loan, the borrower may reapply for a new First Draw
PPP Loan in an amount for which the borrower is eligible under current PPP rules. 5 All
reapplications are subject to the availability of funds. Lenders may approve such a reapplication
if the borrower is eligible for a First Draw Loan under current PPP rules. The reapplication
procedure depends on whether the Lender reported the loan to SBA as “cancelled” or “paid in
full” as a result of the borrower’s repayment before December 27, 2020. The reapplication
procedure applies only to those loans reported as “cancelled” or “paid in full” by the lender
because the borrower returned the full amount of the original loan amount prior to
December 27, 2020.
5
See subsection D.8. of the Consolidated IFR. For clarification, any First Draw PPP Loan
reported as “paid in full” by a Lender due to SBA’s remittance of a forgiveness payment in any
amount to the Lender is not eligible for a reapplication. However, the borrower may be eligible
for a Second Draw PPP Loan.
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If the Lender reported the First Draw PPP Loan as “cancelled” to SBA after the borrower’s full
repayment before December 27, 2020, no further action must be taken by the Lender in order for
the borrower to be able to reapply for a new First Draw PPP Loan. Because the First Draw PPP
Loan was reported as “cancelled,” such borrowers may in good faith make the certification on
the PPP Borrower Application Form Revised January 8, 2021 (SBA Form 2483) that “the
Applicant has not and will not receive another loan under the Paycheck Protection Program,
Section 7(a)(36) of the Small Business Act (15 U.S.C. 636(a)(36)).” In this circumstance, the
borrower may reapply for a new First Draw PPP Loan with any participating PPP Lender.
However, if the Lender reported the First Draw PPP Loan as “paid in full” following the return
of all funds by the borrower before December 27, 2020, SBA’s loan processing system will not
allow a reapplication to be processed until the Lender of Record changes the reported status of
the First Draw PPP Loan in E-Tran from “paid in full” to “cancelled” by following the
instructions below:
a. On the 1502 information page in E-Tran: Change the loan status to “Disbursed Current,”
enter the original total loan amount in the outstanding balance field, and then select save
at the bottom of the screen.
b. Pull up the loan in E-Tran again, select the 1502 information page, change the status to
“Active Undisbursed,” enter zero in the outstanding balance field, enter the full loan
amount in the total amount undisbursed field, and then select save at the bottom of the
screen.
c. After changing the status to “Active Undisbursed” (step b), pull up the loan in E-Tran
again, select the cancel icon at the top of the screen, select the circle for “yes” to cancel,
and then select save. The loan status should change to “Fully Cancelled.”
The Lender of Record must not change a loan status from “paid in full” to “cancelled” unless the
borrower returned the full amount of the original loan amount prior to December 27, 2020. After
the Lender of Record has successfully completed these steps, the Lender of Record (or any
participating PPP Lender) can submit a reapplication for a new First Draw PPP Loan. Because
the First Draw PPP Loan was successfully reported as “cancelled,” such borrowers may in good
faith make the certification on the PPP Borrower Application Form Revised January 8, 2021
(SBA Form 2483) that “the Applicant has not and will not receive another loan under the
Paycheck Protection Program, Section 7(a)(36) of the Small Business Act (15 U.S.C.
636(a)(36)).”
On all reapplications for new First Draw PPP Loans, the Lender must comply with the loan
amount underwriting requirements found in subsection C.3. of the Consolidated IFR. Any
disbursement on a reapplication must be reported by the Lender on a 1502 report within 20 days
of approval of the reapplication. SBA will pay a processing fee to the Originating Lender on any
new First Draw PPP Loan, calculated in accordance with subsection C.5. of the Consolidated
IFR.
2. Borrowers that returned part of a First Draw PPP Loan before December 27, 2020:
If a borrower returned (or repaid) part of a First Draw PPP Loan, the Lender reported to SBA
before December 27, 2020 that the borrower repaid the loan in part, and SBA has not remitted a
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forgiveness payment to the Lender on that loan, the Lender of Record may approve a borrower’s
request for a loan increase and re-disburse funds equal to the difference between the amount
retained by the borrower and the amount previously approved. 6 After re-disbursing the loan
increase amount, the Lender must ensure that the loan amount and status are correctly reported
on the next 1502 report submitted by the Lender.
For example, if a First Draw PPP Loan was originally approved in SBA’s loan processing system
for $100,000, the Lender disbursed $100,000 to the borrower, the Lender reported the fully
disbursed amount to SBA on the 1502 report, and the Lender reported before December 27, 2020
that the borrower repaid $25,000 to the Lender because the borrower could not spend the funds
during the covered period (retaining $75,000), the lender can make an additional disbursement of
$25,000 on the loan to increase the outstanding balance of the loan back to the approved amount
of $100,000, provided SBA has not remitted a forgiveness payment to the Lender on that loan.
Because the Lender previously reported the $25,000 borrower repayment on the loan to SBA on
the 1502 report and E-Tran currently reflects an outstanding balance of $75,000 on the loan, the
Lender must report a corrected balance of $100,000 on the loan on the first 1502 report
submitted by the Lender after the $25,000 re-disbursement. If SBA previously paid the
Originating Lender a processing fee based on the $100,000 fully disbursed amount, SBA will not
pay the Originating Lender any additional processing fee as a result of the re-disbursement.
Any re-disbursement of the increased amount must be reported by the Lender on a 1502 report
on or before March 31, 2021, and is subject to the availability of funds.
3. Borrowers that did not accept the full amount of a First Draw PPP Loan for which they were
approved:
If a borrower did not accept before December 27, 2020 the full amount of a First Draw PPP Loan
for which it was approved in SBA’s E-Tran Origination site and SBA has not remitted a
forgiveness payment to the Lender on that loan, the borrower may request an increase and the
Lender of Record may approve and disburse a loan increase in the amount of the First Draw PPP
Loan up to the amount previously approved. 7 The process for obtaining the loan increase in this
situation differs depending on how the Lender previously reported to SBA before
December 27, 2020 that the borrower did not accept the full amount of the First Draw PPP Loan.
If the Lender reported the loan as partially disbursed for the lower amount and did not process a
decrease of the loan in E-Tran, the Lender may make a second disbursement on the loan to the
borrower up to the full approved amount in E-Tran, provided that SBA has not remitted a
forgiveness payment to the Lender on that loan. For example, E-Tran currently reflects an
approved loan amount of $100,000. The Lender reported to SBA on the 1502 report that it
disbursed $50,000 on the loan. If the Lender never decreased the approved loan amount in
E-Tran to $50,000, the Lender can disburse an additional $50,000 to the borrower and report that
disbursement on the next 1502 report filed for the loan. The disbursement of the increased
6
See subsection D.8. of the Consolidated IFR.
7
See subsection D.8. of the Consolidated IFR.
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amount must be reported by the Lender on a 1502 report on or before March 31, 2021, and is
subject to the availability of funds. In this example, SBA will pay the full processing fee to the
Originating Lender because it has not been previously paid.
If the Lender processed a decrease of the approved loan amount in E-Tran, the Lender may
process an increase on the loan. For example, a borrower was originally approved for $100,000,
but the borrower only accepted $50,000 (never receiving the full approval amount), the Lender
decreased the approved loan amount in E-Tran to $50,000, and reported disbursement of $50,000
on the 1502 report. In this scenario, the Lender may process a loan increase of $50,000 on the
loan, provided that SBA has not remitted a forgiveness payment to the Lender on that loan. The
process for obtaining a loan increase using E-Tran is set forth in the “Section 1102 of the
CARES Act – Paycheck Protection Program (PPP)” section of the FTA’s Downloads and
Resources page. After the Lender successfully processes a loan increase in E-Tran, the Lender
must disburse the increased amount to the borrower within 10 calendar days and report the
increase on the next 1502 report. In this example, SBA will pay the Originating Lender a
processing fee on the increased amount.
Any request for an increase must be submitted electronically by the Lender in E-Tran on or
before March 31, 2021, and is subject to the availability of funds.
Other Applicable Procedures:
1. Disbursement:
If a First Draw PPP Loan is increased in any of the manners described above, the lender must
make a single additional disbursement of the increased loan proceeds within 10 calendar days of
the Lender’s successful processing of the increase in E-Tran. If a reapplication for a new First
Draw PPP Loan is approved as described above, the Lender must make a one-time, full
disbursement of the PPP loan within ten calendar days of loan approval; for the purposes of the
PPP, a loan is considered approved when the loan is assigned a loan number by SBA. 8
2. Limitation of One First Draw PPP Loan:
A borrower may reapply for a new First Draw PPP Loan in accordance with this Notice
notwithstanding the prohibition on more than one First Draw PPP Loan.
Lender Instructions for SBA Form 1502 Reporting and Making Changes to Loan Statuses
and Loan Amounts:
SBA’s Fiscal Transfer Agent (FTA) provides step-by-step instructions for 1502 reporting and for
making changes to loan statuses and loan amounts. Instructions are posted in the “Section 1102
of the CARES Act – Paycheck Protection Program (PPP)” section of the FTA’s Downloads and
Resources page.
Lender Instructions for First Draw PPP Loan Reapplications:
8
See subsection D.5. of the Consolidated IFR.
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Instructions for submitting a reapplication for a new First Draw PPP Loan can be found in the
welcome email sent to all lenders from SBA as well as on the SBA Paycheck Protection Platform
(previously known as the Loan Forgiveness Platform).
Lender Responsibilities and Additional Information:
1. Lenders approve reapplications for new First Draw PPP Loans and increases to First Draw
PPP Loans under lenders’ delegated authority. Lenders may not approve reapplications for new
First Draw PPP Loans or increases to First Draw PPP Loans for borrowers where SBA has
remitted a forgiveness payment in any amount to the Lender on that loan; however, such
borrowers remain eligible for Second Draw PPP Loans if they meet the eligibility criteria for
Second Draw PPP Loans.
2. If the Lender has submitted a forgiveness decision to SBA and SBA has not yet remitted the
forgiveness payment to the Lender, the Lender must withdraw the forgiveness decision from the
SBA Paycheck Protection Platform prior to taking any actions contemplated in this Notice.
3. Lenders submit reapplications for new First Draw PPP Loans using the SBA Paycheck
Protection Platform to request an SBA loan number for First Draw PPP Loans. Lenders request
increases to First Draw PPP Loans through E-Tran.
4. Only the Lender of Record may increase a loan.
5. For reapplications and increases, Lenders must comply with the loan amount underwriting
requirements in paragraph C.3. of the Consolidated IFR.
6. Lenders must disburse loan increases or reapplications in a single disbursement within
10 calendar days of successful processing of the increase in E-Tran or issuance of the SBA loan
number for reapplications. Except for those 1502 reports identified in this Notice that must be
submitted on or before March 31, 2021, Lenders must submit the 1502 report within 20 calendar
days after a First Draw PPP Loan increase is successfully processed in E-Tran or after the
issuance of the SBA loan number for reapplications. Lenders may report PPP Loan increases
and reapplications in the same batch 1502 report with PPP First Draw Loans and PPP Second
Draw Loans. Lenders must not commingle PPP Loans with regular 7(a) Loans in a batch 1502
report.
Processing Fees:
Lender processing fees due and payable by SBA, if any, including fee differentials due to loan
increases and processing fees on reapplications, will be remitted to the Originating Lender in
accordance with SBA Procedural Notice 5000-20036 (July 13, 2020). For loan increases,
processing fees will be calculated in accordance with the PPP rules in effect at the time the
borrower submitted its original First Draw PPP Loan application. For reapplications, processing
fees will be calculated in accordance with subsection C.5. of the Consolidated IFR. In order to
obtain a processing fee on a reapplication or a loan increase, the Lender must follow the
procedures set forth in SBA Procedural Notice 5000-20036 and this Notice.
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Revised Lender Confirmation:
By submitting a 1502 report on a First Draw PPP Loan or a Second Draw PPP Loan on or after
the effective date of this Notice, any PPP Lender that submitted a 1502 report for a PPP Loan
before such date agrees to the following revision to the one-time certification previously made by
such Lender: 9
By checking the “I confirm” box below, Lender is agreeing that for each SBA Form 1502
report submitted by Lender to request payment of First Draw Loan or Second Draw Loan
Paycheck Protection Program (PPP) processing fees, Lender confirms that:
(1) except for any First Draw Loan included in the report that has been or may be
increased, (a) all First Draw Loans and Second Draw Loans included in the report were
fully disbursed to the borrowers on the disbursement dates entered and in the loan
amounts entered in the report, and (b) Lender will make no further disbursements on the
First Draw Loans and Second Draw Loans included in the report;
(2) for any First Draw Loan included in the report that has been increased, (a) Lender
approved the increase in accordance with PPP requirements, (b) Lender has fully
disbursed the increased amount to the borrower on the disbursement date entered and in
the amount entered in the report, and (c) Lender will make no further disbursements on
the First Draw Loan;
(3) all information in the report is true and correct; and
(4) the report has been submitted by an authorized employee or agent of Lender acting
within the scope of Lender’s authority and Lender acknowledges responsibility for all
entries and certifications made on its behalf.
PPP Lenders submitting a 1502 report for a PPP loan for the first time will be required to make
this revised one-time confirmation in the Lender’s FTA portal upon submission of their first
1502 report requesting payment of PPP processing fees.
Unresolved Borrowers:
If a First Draw PPP Loan is under review pursuant to PPP rules and/or information in SBA’s
possession indicates that the borrower may have been ineligible for the First Draw PPP Loan it
received or for the loan amount received by the borrower, the Lender of Record will receive
notification from SBA when the Lender submits a request for increase of the First Draw PPP
Loan or submits a reapplication for a First Draw PPP Loan (“unresolved borrower”). 10 If the
Lender receives notification of an unresolved borrower, the Lender will not be able to process an
9
The revised confirmation will also be posted on the home page to the 1502 Dashboard (before
the Lender logs in). By logging in to the 1502 Dashboard, the Lender will be agreeing to the
revised Lender confirmation.
10
This process also applies to Second Draw PPP Loans.
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increase on the First Draw PPP Loan, nor will the Lender be able to obtain an SBA loan number
on a First Draw PPP Loan reapplication. SBA will resolve expeditiously the issue related to the
unresolved borrower and will notify the Lender of the process to obtain an increase on the First
Draw PPP Loan or obtain a loan number on a First Draw PPP Loan reapplication, if appropriate.
Loan Increase Availability:
Lenders may approve increases on First Draw PPP Loans starting on January 25, 2021.
Questions:
Lenders may call the Lender Hotline at (833) 572-0502 for live assistance regarding platform
access and support, policy questions and procedures, and Capital Access Financial system
(CAFS) and SBA’s Electronic Transmission (E-Tran) systems support. Lenders may also direct
general PPP forgiveness questions to PPPForgivenessRequests@sba.gov; requests for advanced
technical support, API support and UAT error support to developer@ussbaforgiveness.com; and
requests for assistance on SBA Paycheck Protection Platform navigation and platform user
experience issues to help@ussbaforgiveness.com.
Questions concerning this Notice may be directed to the Lender Relations Specialist in the local
SBA Field Office, which can be found at:
https://www.sba.gov/tools/local-assistance/districtoffices.
Dianna L. Seaborn
Director
Office of Financial Assistance
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