By Robert T. Smith and Madeline O. McElhanon
On August 11th the Small Business Administration updated its Paycheck Protection Program (PPP) frequently asked questions on loan forgiveness. The update included the following guidance:
- If a borrower received an Economic Injury Disaster Loan (EIDL) advance, SBA will reduce the borrowers PPP loan forgiveness amount by the EIDL advance. The Lender will be able to confirm the amount of the EIDL advance by reviewing the borrower’s EIDL advance information in the PPP Forgiveness Portal.
- If there had been a reduction in forgiveness for an EIDL advance, the borrower must repay the balance due on the PPP loan by the maturity date. The lender is responsible for notifying the borrower of the loan forgiveness amount remitted by SBA.
- If borrower received an EIDL advance in excess of the amount of the PPP loan, the borrower will not receive any forgiveness on the PPP loan.
- In all cases, the lender must continue to service the loan and is responsible for notifying the borrower of the date on which the borrower’s first loan payment is due.
- If a borrower is determined to have been ineligible for a PPP loan for any reason, SBA may seek repayment of the outstanding PPP loan balance or pursue other available remedies.
We are advising both lenders and borrowers as they navigate the PPP forgiveness process. Please contact one of our attorneys for assistance.
Robert T. Smith heads the Finance and Commercial Transactions Practice Group. His diverse corporate practice focuses on representing companies and financial institutions in general business, transactional, securities and regulatory matters.
Madeline O. McElhanon is an associate in Finance & Commercial Transactions Practice Group where she will advise banking, healthcare, real estate and technology companies on transactional, tax, securities and regulatory matters.
Disclaimer: The information included here is provided for general informational purposes only and should not be a substitute for legal advice nor is it intended to be a substitute for legal counsel. For more information or if you have further questions, please contact one of our Attorneys.