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SBA, Repeal of EIDL Advance Deduction Requirement for SBA Loan Forgiveness Remittances to PPP Lenders

Summary

SBA Procedural Notice, control number 5000-20075, addressed to all SBA employees and Paycheck Protection Program lenders, effective January 8, 2021. It states that Section 1110(e)(6) of the CARES Act required SBA to deduct any EIDL Advance from forgiveness payments remitted to PPP lenders, and that the Economic Aid Act, signed December 27, 2020, repealed that section. Effective immediately, SBA will no longer make the deduction, applied to payments with a status of "Payment Confirmed" dated December 29, 2020 or later. For payments already reduced, SBA will automatically remit a reconciliation payment plus interest, and the lender is responsible for notifying the borrower. The notice closes with the name Jihoon Kim, Director, Office of Financial Program Operations.

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“SBA, Repeal of EIDL Advance Deduction Requirement for SBA Loan Forgiveness Remittances to PPP Lenders.” Original at legacy.sba.gov. Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/sba-repeal-of-eidl-advance-deduction-requirement-for-sba-loan-forgiven-3c0347f069/, SHA-256 3f18dcba74287f7d28a94fe1716a451af7e7a070b0d1aa6f89092bcbdbc1308b.

Full text

                            SBA Procedural Notice

TO: All SBA Employees and Paycheck Protection                                             CONTROL NO.: 5000-20075
Program Lenders

SUBJECT: Repeal of EIDL Advance Deduction                                                 EFFECTIVE: January 8, 2021
Requirement for SBA Loan Forgiveness
Remittances to PPP Lenders




Section 1110(e)(6) of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act)
required SBA to deduct the amount of any Economic Injury Disaster Loan (EIDL) Advance
received by a PPP borrower from the PPP forgiveness payment remitted by SBA to the PPP
lender. On October 2, 2020, SBA began remitting forgiveness payments to PPP lenders, with the
required EIDL Advance deductions. On December 27, 2020, the President signed the Economic
Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act (Economic Aid Act), which
repealed Section 1110(e)(6) of the CARES Act.1

In order to implement the repeal, the Forgiveness Platform has been updated and, effective
immediately, SBA will no longer deduct EIDL Advances from forgiveness payments remitted to
PPP lenders. This change will be applied to SBA forgiveness payments with a status of
“Payment Confirmed” dated December 29, 2020 or later.

For those loans where SBA remitted a forgiveness payment to a PPP lender that was reduced by
an EIDL Advance, SBA will automatically remit a reconciliation payment to the PPP lender for
the previously-deducted EIDL Advance amount, plus interest through the remittance date. PPP
lenders are not required to request remittance of the reconciliation payment.

SBA will identify forgiveness payments that were reduced by EIDL Advances and automatically
remit a reconciliation payment to the ACH account identified by the PPP lender in the
Forgiveness Platform. Upon confirmation that the payment has been accepted by the PPP lender,
SBA will generate a Notice of Paycheck Protection Program Reconciliation Payment that will be
available in the Forgiveness Platform.




1
    See Section 333 of the Economic Aid Act.
PAGE 1 of 1                                                                                       EXPIRES: 1-1-22
SBA Form 1353.3 (4-93) MS Word Edition; previous editions obsolete
Must be accompanied by SBA Form 58

                                           Federal Recyling Program   Printed on Recycled Paper
The PPP lender is responsible for notifying the borrower of the reconciliation payment. The PPP
lender is also responsible for re-amortizing the loan and notifying the borrower of the amount of
the next payment due, or advising the borrower that the loan has been paid in full, whichever is
applicable. If the amount remitted by SBA to the PPP lender exceeds the remaining principal
balance of the PPP loan (because the borrower made a payment on the loan), the PPP lender
must remit the excess amount, including accrued interest paid by the borrower, to the borrower.

Questions concerning this Notice may be directed to the Lender Relations Specialist in the local
SBA Field Office. Local SBA Field Offices can be found at https://www.sba.gov/tools/local-
assistance/districtoffices



Jihoon Kim
Director
Office of Financial Program Operations




PAGE 2 of 2                                                                                EXPIRES: 1-1-22
SBA Form 1353.3 (4-93) MS Word Edition; previous editions obsolete
Must be accompanied by SBA Form 58

                                    Federal Recyling Program   Printed on Recycled Paper

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File
5000-20075-508.pdf
Size
111,091 bytes
SHA-256
3f18dcba74287f7d28a94fe1716a451af7e7a070b0d1aa6f89092bcbdbc1308b
Our copy
5000-20075-508.pdf
Original
legacy.sba.gov
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