President Biden and SBA announced changes to the PPP on Monday making it easier for small businesses to apply for PPP loans. The president cited the 400,000 small businesses that went out of business during the pandemic in stressing the need to keep hard-hit businesses afloat. Overall, there also will be increased oversight “… to ensure that every dollar spent is spent well.”

Effective Feb. 24, 2021. Businesses with fewer than 20 employees have a 14-day exclusive period of access to apply for PPP relief.

 Effective the first week of March. Applicants with delinquent student loan debt and some with prior non-fraudulent felony convictions won’t be prohibited from getting PPP relief. There also will be more financial support for sole proprietors by revising PPP formulas and creating a $1billion fund for these applicants. In addition, access is ensured for non-citizen small business owners who are lawful U.S. residents. They may now use their Individual Taxpayer Identification Numbers (ITINs) to apply for relief. Get ready for a flood of applications.

Important. Provisions in SBA Procedural Notice 5000-20095 remain.

First and Second Round PPP payment periods adjusted. SBA Procedural Notice 5000-20095 effective Feb 16, 2021 announces changes to Section 1112 payments for 7(a), 504 and Microloans. It’s a long, long time from January to February. Just a month ago, SBA Procedural Notices 5000-20079 and 20080 allocated $3.5 billion to make six months of loan payments under Section 1112 of the CARES Act “… subject to the availability of funds.”

SBA now finds it has insufficient funds to meet the six-months of payments commitment. They’ve got a plan for that. The Agency’s Adjustment Plan reduces the number of months for Section 1112 payments beginning with payments made in February.

Here’s a snapshot of key SBA Procedural Notice 5000-20095 provisions:

 SBA will adjust the number of payment months for 7(a) loans. No need to correct the loan data you submitted through the CARES Act menu on the 1502 Dashboard on FTA’s website.

 Newly eligible First Round loans. For 7(a), 504 and Microloans approved on or before Sept, 27, 2020 and fully disbursed on or after September 28, 2020, Section 1112 payments will be made for three months instead of six. New loans approved Feb. 1, 2021- Sept.30, 2021 will receive payments for three months “subject to the availability of funds.”

Second Round payments. For7(a), 504 and Microloans approved before March 27, 2020, SBA will make Section 1112 payments for two months instead of three. Under conditions detailed in the Notice, an additional three months of payments will be made after the two-month period ends. For loans approved March 17, 2020-Sept. 27, 2020, no Second Round 1112 payments will be made. NAICS Codes 61, 71, 72, 213, 315, 448, 451, 481, 485, 487, 511, 512, 515, 532, or 812, will receive payments for an additional three months instead of five months.

 What you can do. It’s a good idea to reach out to your First and Second Round borrowers before they reach out to you. And they will. Section 1112 payments were a lifeline for many businesses. It just got shorter. You also might get questions about longer waits for payments. In many cases, payment delays are a good thing. As reinforced by the Administration this week, SBA is doing what wasn’t done the first time around: verifying borrowers to make sure funds are properly dispersed.

What you can do for SBA. No doubt, we’re in a whirlwind of unprecedented change. And SBA is in the eye of the hurricane. The Agency is churning out a constant flow of information while keeping up with new technologies and the changes coming fast and furious out of Washington, You can help. Have you seen any process glitches in your operations? If so, continue contacting SBA. Let the Agency know of any issues with an eye to process improvements.

You know the drill: More guidance is coming. We’ll keep you posted.

Remain positive and stay safe.

Lisa Lerner
JRB Associate

Note: all links go to SBA’s website