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SBA issues IFR on PPP loan disbursement requirements
On April 28, the Small Business Administration (SBA) issued an interim final rule (IFR) regarding disbursements under the SBA’s Paycheck Protection Program (PPP). The IFR explains that PPP lenders must fund loans to approved small businesses—those that were issued an SBA loan number—in one disbursement. Borrowers may not request multiple disbursements to delay their eight weeks of coverage. Further, the start date for the eight weeks of coverage for any loans that were approved but are not fully disbursed is the date of the first disbursement. The IFR makes clear that funds must be disbursed within 10 days of a borrower’s loan approval date, and that the 10 days starts on April 28 for any loans that were previously approved but not disbursed prior to the issuance of the IFR. PPP lenders are not responsible for disbursement delays based on the failure of the borrower to submit required documents, and a borrower’s loan will be cancelled if all required documents are not submitted within 20 days of loan approval. The IFR further instructs that in order to receive the lender processing fee, PPP lenders must disburse each loan and submit SBA Form 1502 within 20 days of loan approval. As this form has not yet been released, the deadline for submitting the form for previously approved loans is May 18. The IFR states that lenders will not receive the processing fee for loans that are: (i) cancelled by the borrower prior to disbursement of loan funds; or (ii) cancelled and repaid by the borrower after disbursement of loan funds. The IFR is effective immediately, and comments must be submitted by June 3.