SBA Procedural Notice 5000-851892: Guidance on the Return of Paycheck Protection Program (PPP) Loan Funds
Summary
SBA Procedural Notice 5000-851892, effective December 18, 2023, gives guidance on returning Paycheck Protection Program (PPP) loan funds to SBA. A PPP lender must accept returned funds regardless of the loan's status and, if the loan has been forgiven or purchased by SBA, return them to SBA within 15 business days of receipt. Table 1 sets out steps by guaranty purchase and forgiveness status using SBA Form 1502, SBA Form 172 and SBA Form 1544. The notice also covers depository institutions holding suspected fraudulent deposits, fraud recoveries and borrowers returning funds to the lender. Jihoon Kim, Director, Office of Financial Program Operations, is named at the end.
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“SBA Procedural Notice 5000-851892: Guidance on the Return of Paycheck Protection Program (PPP) Loan Funds.”
Original at legacy.sba.gov. Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/sba-procedural-notice-5000-851892-guidance-on-the-return-of-paycheck-p-bf532f1d16/
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SBA Procedural Notice
TO: All SBA Employees, PPP Borrowers, PPP CONTROL NO.: 5000-851892
Lenders, and Other Financial Intermediaries
SUBJECT: Guidance on the Return of Paycheck EFFECTIVE: December 18, 2023
Protection Program (PPP) Loan Funds
The purpose of this Notice is to provide guidance to Borrowers, Lenders, and Other Financial
Intermediaries on the return of Paycheck Protection Program (PPP) loan funds to SBA. This
Notice also provides PPP Lenders with guidance on their responsibility to accept returned PPP
loan funds.
Depository Institutions
Depository institutions should follow regulator guidance and other applicable law for handling
PPP loan deposits that are suspected to be fraudulent. To the extent that any such funds are
subject to a seizure order or similar legal process, the depository institution should follow the
requirements of the seizure order. Depository institutions that received PPP loan disbursements
from PPP Lenders and are holding the funds due to a suspicion of fraud, shall, if appropriate,
return the PPP loan proceeds to the PPP Lender that disbursed the PPP loan and notify the SBA
Office of Credit Risk Management (OCRM). The depository institution should not return the
funds to SBA. PPP Lenders that receive such funds from depository institutions should follow
the instructions below for return of PPP funds, if SBA has remitted a Forgiveness or Guaranty
Purchase payment to the PPP Lender.
PPP Lenders – Loan Payment Administration
If a Borrower makes a voluntary payment or returns PPP loan funds or a PPP Lender receives a
return of funds from a depository institution, the PPP Lender must accept those funds regardless
of the loan’s status. If the PPP loan has been forgiven or purchased by SBA, the PPP Lender
must return the funds to SBA within 15 business days of receipt. Lenders are reminded that
OCRM may conduct reviews to ensure lenders are compliant with stated SBA procedures,
including a confirmation that all PPP funds returned to lenders have been reported and remitted
to SBA in a timely manner.
PAGE 1 of 5 EXPIRES: 12-1-24
SBA Form 1353.3 (4-93) MS Word Edition; previous editions obsolete
Must be accompanied by SBA Form 58
Federal Recycling Program Printed on Recycled Paper
PPP Lenders that receive a remittance from a PPP Borrower or depository institution are advised
to use Table 1 below to determine how to apply the remittance1 and return the remittance to the
SBA, if applicable. Specific instructions are provided below the table for lenders who receive
payments related to suspected or confirmed fraudulent loans.
Note that for payments on unforgiven balances on loans that have not been purchased by SBA,
borrowers would be expected to make regular payments to the lender, and the lender would
notify SBA through the normal 1502 process, rather than remit funds.
Table 1: Lender Instructions for Remitting Funds
SBA Guaranty Forgiveness Status Process
Purchased? (Yes/No)
No Loan has not been The Lender must notify SBA that the PPP loan
Forgiven2 funds have been returned by completing SBA
Form 1502 Guaranty Loan Status & Lender
Remittance Form (SBA Form 1502 and
Instructions | U.S. Small Business
Administration). The Lender must apply the
amount of the payment to the outstanding PPP
loan balance.
Yes Loan has not been The Lender must remit the funds to SBA by
Forgiven2 completing SBA Form 172 Transaction Report
On Loan Servicing By Lender (Pay.gov - SBA
Form 172 - SBA Transaction Report on Loan
Serviced by Lender).
No Fully Forgiven PPP Lenders must follow a 2-step process to
return forgiveness proceeds to SBA:
1. Create a receivable in the PPP Platform
payment correction module3
1
Procedural Notice 5000-812316 states that Lenders must service PPP loans until they are fully forgiven or paid in
full or, in the event of a default or other qualifying event, until SBA purchases the guaranty and charges off any
uncollectable remaining balance. The Notice also provides that the PPP Lender is responsible for remitting post-
guaranty purchase payments received on the PPP loan to SBA.
2
The loan has not been forgiven and there is not a submitted or pending forgiveness application.
3
For instructions on how to create a receivable in the PPP platform, sign into the PPP Platform; go to the Resources
and Forums link, Lender User Guide, Forgiveness Payment Corrections Guide.
PAGE 2 of 5 EXPIRES: 12-1-24
SBA Form 1353.3 (4-93) MS Word Edition; previous editions obsolete
Must be accompanied by SBA Form 58
Federal Recycling Program Printed on Recycled Paper
SBA Guaranty Forgiveness Status Process
Purchased? (Yes/No)
2. After receivable is created and the status
of request is Eligible for Payment in the
PPP Platform, funds can be remitted to
SBA via SBA Form 1544 in Pay.gov
(Pay.gov - SBA Form 1544 - Lender Fee
Payments)
No Partially Forgiven Forgiven Portion - PPP Lenders must follow a
2-step process to return forgiveness proceeds to
SBA:
1. Create a receivable in the PPP Platform
payment correction module4
2. After receivable is created and the status
of request is Eligible for Payment in the
PPP Platform, funds can be remitted to
SBA via SBA Form 1544 in Pay.gov
(Pay.gov - SBA Form 1544 - Lender Fee
Payments)
Unforgiven Portion – The Lender must notify
SBA that PPP loan funds have been returned by
completing SBA Form 1502 Guaranty Loan
Status & Lender Remittance Form (SBA Form
1502 and Instructions | U.S. Small Business
Administration). The Lender must apply the
amount of the payment to the outstanding PPP
loan balance.
Yes Partially Forgiven Forgiven Portion - PPP Lenders must follow a
2-step process to return forgiveness proceeds to
SBA:
1. Create a receivable in the PPP Platform
payment correction module4
4
For instructions on how to create a receivable in the PPP Platform, sign into the PPP Platform; go to the Resources
and Forums link, Lender User Guide, Forgiveness Payment Corrections Guide.
PAGE 3 of 5 EXPIRES: 12-1-24
SBA Form 1353.3 (4-93) MS Word Edition; previous editions obsolete
Must be accompanied by SBA Form 58
Federal Recycling Program Printed on Recycled Paper
SBA Guaranty Forgiveness Status Process
Purchased? (Yes/No)
2. After receivable is created and the status
of request is Eligible for Payment in the
PPP Platform funds can be remitted to
SBA via SBA Form 1544 in Pay.gov
(Pay.gov - SBA Form 1544 - Lender Fee
Payments)
Unforgiven Portion- The Lender must remit the
funds to SBA by completing SBA Form 172
Transaction Report On Loan Servicing By Lender
(Pay.gov - SBA Form 172 - SBA Transaction
Report on Loan Serviced by Lender).
PPP Lenders who have scenarios that are not addressed in Table 1 should contact the appropriate
Commercial Loan Servicing Center as outlined in Table 2 below.
PPP Lenders – Fraud Recoveries
PPP Lenders that receive a recovery related to a fraudulent PPP loan that has been forgiven or
purchased by SBA must return the funds to SBA via the COVID-19 CARES Act Recovery of
Funds page on Pay.gov. All required fields must be completed, including providing a reason
why the funds are being returned.
PPP Borrowers
Returning Funds to the Lender
The Borrower must return funds to the Lender unless otherwise directed in writing by SBA or
Treasury. The Lender will use the appropriate channels detailed above to return the funds
received from the Borrower to SBA. If the Borrower needs additional help returning their PPP
loan funds to their Lender, they should contact the Commercial Loan Servicing Center (CLSC)
assigned to the state as outlined in Table 2 below.
The Lender may ask the Borrower for information regarding the loan; therefore, the Borrower
should have all loan documentation available for the Lender.
PAGE 4 of 5 EXPIRES: 12-1-24
SBA Form 1353.3 (4-93) MS Word Edition; previous editions obsolete
Must be accompanied by SBA Form 58
Federal Recycling Program Printed on Recycled Paper
Table 2: Commercial Loan Servicing Center Contact Information
CLSC Contact Information States
Fresno CLSC (559) 487-5791 Alaska, Arizona, California,
fsc.servicing@sba.gov Colorado, Guam, Hawaii, Idaho,
Illinois, Indiana, Iowa, Kansas,
Louisiana, Michigan, Minnesota,
Missouri, Montana, Nebraska,
Nevada, New Mexico, North
Dakota, Utah, Washington,
Wisconsin, Wyoming
Little Rock CLSC (501) 324-7379 Alabama, Arkansas, Connecticut,
lrsc.servicing@sba.gov Delaware, Florida, Georgia,
Kentucky, Maine, Maryland,
Massachusetts, Mississippi, New
Hampshire, New Jersey, New
York, North Carolina, Oklahoma,
Pennsylvania, Puerto Rico, Rhode
Island, South Carolina, Tennessee,
Texas, The U.S. Virgin Islands,
Vermont, Virginia, Washington,
DC, West Virginia
Questions concerning this notice can be directed to the Lender Relations Specialist in the local
SBA Field Office.
Jihoon Kim
Director
Office of Financial Program Operations
PAGE 5 of 5 EXPIRES: 12-1-24
SBA Form 1353.3 (4-93) MS Word Edition; previous editions obsolete
Must be accompanied by SBA Form 58
Federal Recycling Program Printed on Recycled Paper
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