SBA Issues Updates on PPP Processing Fees, EIDL Advance Reconciliation Payments (ABA Banking Journal)

Summary

This ABA Banking Journal article reports that SBA issued an updated procedural notice on how lenders report Paycheck Protection Program loans and collect processing fees. For first-draw PPP loans made on or after December 27, 2020, lenders receive 50% or $2,500, whichever is less, on loans of not more than $50,000; 5% on loans above $50,000 up to $350,000; 3% on loans above $350,000 and under $2 million; and 1% on loans of at least $2 million. For second-draw loans the tiers are 50% or $2,500, 5% and 3%, with the 3% tier covering every loan above $350,000. Lenders report fully disbursed loans on SBA Form 1502 within 10 calendar days. SBA also said it would begin reconciliation payments on February 9 for forgiveness payments reduced by an EIDL advance, equal to the deducted advance plus interest.

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SBA Issues Updates on PPP Processing Fees, EIDL Advance Reconciliation Payments

The Small Business Administration tonight issued an updated procedural notice regarding the reporting process through while lenders report on Paycheck Protection Program loans and collect processing fees. The guidance addresses fees for new first-draw PPP loans and second-draw PPP loans and outlines reporting requirements for lenders.

For first-draw PPP loans made on or after Dec. 27, 2020, lenders will receive processing fees in the following amounts: 50% or $2,500, whichever is less, for loans of not more than $50,000; 5% for loans of more than $50,000 and not more than $350,000; 3% for loans of more than $350,000 and less than $2 million; and 1% for loans of at least $2 million.

For second-draw PPP loans, lenders will receive a 50% processing fee or $2,500, whichever is less, for loans of not more than $50,000; a 5% processing fee for loans of more than $50,000 and not more than $350,000; and a 3% processing fee for loans above $350,000.

Lenders should use SBA Form 1502 to report fully disbursed loans to SBA within 10 calendar days after the disbursement of a PPP loan.

SBA also announced that it will begin remitting reconciliation payments beginning Feb. 9 through Feb. 19 for any with an SBA forgiveness payment that was reduced by the amount of an Economic Injury Disaster Loan advance.

In a communication sent directly to lenders earlier today, SBA noted that “the amount of the reconciliation payment will be equal to the previously-deducted EIDL advance amount, plus interest through the remittance date. SBA will use the interest accrual method currently identified in the Forgiveness Platform.”

SBA added that lenders must notify borrowers of the reconciliation payment, and that they are responsible for re-amortizing the loan. Lenders must also notify the borrower of either the amount of the next payment due, or that the loan has been paid in full.

Tags: Commercial clients Commercial lending Coronavirus COVID-19 SBA Paycheck Protection Program Small business Small business lending

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