The SBA has released some key information regarding the first- and second-draw Payment Protection Program loans. Below are three key notices and summary information, and it is important to note, that item number-two, below, is significant to PPP lenders in that they will receive a remittance payment on EIDL advances they are currently servicing as a loan. Some small credit unions are currently carrying anywhere from $30,000 to well over $100,000 in EIDL advances.
SBA Paycheck Protection Program (PPP) Top-Line Overview of First and Second Draw Loans
SBA Procedural Notice – Repeal of EIDL Advance Deduction Requirement for SBA Loan Forgiveness Remittances to PPP Lenders
SBA has officially sent notice regarding their remittance payment to lenders for EIDL advances. Previously, lenders would receive PPP loan forgiveness with the EIDL advance being deducted, if applicable. As such, the lender was on the hook to collect the EIDL advance from the member over two to five years.
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.
SBA Paycheck Protection Program (PPP) – Definition of Community Financial Institution
As per the Economic Aid Act, a Community Financial Institution is one of the four types of lenders. Community Financial Institutions will be able to submit first-draw (first-time) PPP loans starting today. Second-draw (second-time) loans start on Wednesday.
- Community development financial institution
- Minority depository institution
- Community development corporation
- SBA microlender intermediary