April 30, 2020

SBA Limits PPP Funds For Corporate Groups To $20 Million

In an interim final rule today, the Small Business Administration said it will limit the amount of Paycheck Protection Program loan funds that a corporate group can receive to $20 million. Businesses are considered part of a corporate group if “they are majority owned, directly or indirectly, by a common parent,” according to the rule.

The cap is effective today for outstanding loan applications and also applies to loans that have not yet fully been disbursed. Borrowers who are part of a corporate group that has received funds in excess of this amount are required to notify their lenders and withdraw or cancel pending applications. Borrowers who fail to take these actions will not be eligible for loan forgiveness.

“A lender may rely on an applicant’s representation concerning the applicant’s compliance with this limitation,” SBA said in the rule. “This rule has no effect on lender obligations required to obtain an SBA guarantee for PPP loans.”

Coronavirus Compliance FAQs, Additional Resources

The MBA Compliance Services team continues to receive compliance questions related to the coronavirus pandemic. The following FAQ documents have been recently updated. 
  • Bank Compliance COVID-19 FAQs 
  • EIP EFT Payments FAQs
  • EIP Paper Check FAQs

The MBA Compliance Services team will continue to update these FAQs with additional questions. 

Bipartisan Letter Urges SBA To Reserve Funds For Regular 7(a) Loans

Noting that the recent bill adding funds to the Paycheck Protection Program as part of the Small Business Administration’s 7(a) loan program did not establish separate authorization caps, a bipartisan group of senators urged SBA to provide an “immediate administrative fix” to preserve regular 7(a) lending.

“[T]he 7(a) program would be unable to continue operating since separate authorization caps were not established and the amount appropriated in H.R. 266 provides funding to commit the entire authorized amount to PPP loans, leaving no lending authority for 7(a),” said the letter, which was led by Sens. Marco Rubio, R-Fla., and Ben Cardin, D-Md., who are chairman and ranking member, respectively, of the Senate Small Business Committee.

960,000 PPP Loans Made Through Wednesday Afternoon

As of 4 p.m. Tuesday afternoon, the American Bankers Association learned the Small Business Administration had approved more than 960,000 round two Paycheck Protection Program loan applications amounting to more than $90 billion. More than 5,300 lenders have made loans through the PPP.

Lenders with assets of less than $10 billion made 587,000 of these loans totaling $43 billion while lenders with assets of $10 billion to $50 billion made more than 206,000 loans amounting to more than $20 billion. Lenders with assets of more than $50 billion had 167,000 loans approved for a total of more than $25 billion.
After a rocky first two days for round two of the PPP, ABA President and CEO Rob Nichols tweeted he was “[h]earing that banks of all sizes across the nation have had more success accessing the PPP loans system today.” Nichols added that ABA is “working closely with [SBA Administrator Jovita Carranza] and SBA to ensure the system will work efficiently so America’s banks can help more small businesses in need.”

Trade Groups Seek Treasury Clarification On EIP Issues

The American Bankers Association and several trade groups asked the Treasury Department to respond to news reports that Treasury would seek the return of CARES Act economic impact payments sent to deceased individuals.
“This report is contrary to guidance previously provided by the Department of the Treasury, and contravenes both NACHA rules and Treasury’s own Green Book that govern federal ACH payments,” the groups said. “To reduce confusion amongst recipients and their financial institutions, we request that this matter be addressed with all due haste.”
The groups also sought Treasury clarification on several EIP operational issues, including forecasts of volumes, projected dates, check processing, electronic payments and the IRS user portal.

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