The SBA issued new guidance on the Paycheck Protection Program on April 2, 2020. Below is a summary of changes:

• What are the lending criteria? Lenders will rely on borrower certifications to determine borrow eligibility.

• Affiliation Rules: No further guidance was provided. However, the SBA stated it intends to issues new guidance on this issue promptly. We will keep you informed.

• Interest rate: 1% (prior guidance said 0.5%), with a maturity of 2 years.

• Ineligible businesses: As defined in 13 CFR §120.110 and the Standard Operating Procedure:

  • Financial businesses primarily engaged in the business of lending, such as banks, finance companies, and factors (pawn shops, although engaged in lending, may qualify in some circumstances);

  • Passive businesses owned by developers and landlords that do not actively use or occupy the assets acquired or improved with the loan proceeds (except Eligible Passive Companies under § 120.111);

  • Life insurance companies;

  • Businesses located in a foreign country (businesses in the U.S. owned by aliens may qualify);

  • Pyramid sale distribution plans;

  • Businesses deriving more than one-third of gross annual revenue from legal gambling activities;

  • Businesses engaged in any illegal activity;

  • Private clubs and businesses which limit the number of memberships for reasons other than capacity;

  • Government-owned entities (except for businesses owned or controlled by a Native American tribe);

  • Businesses principally engaged in teaching, instructing, counseling or indoctrinating religion or religious beliefs, whether in a religious or secular setting;

  • Loan packagers earning more than one third of their gross annual revenue from packaging SBA loans;

  • Businesses with an Associate who is incarcerated, on probation, on parole, or has been indicted for a felony or a crime of moral turpitude;

  • Businesses in which the Lender or CDC, or any of its Associates owns an equity interest;

  • Businesses which:

    • Present live performances of a prurient sexual nature; or

    • Derive directly or indirectly more than de minimis gross revenue through the sale of products or services, or the presentation of any depictions or displays, of a prurient sexual nature;

• Will interest accrue during the 6 month deferment? Yes, it will.

• What forms do I need to submit? SBA Form 2483 and payroll documentation.

• Refinancing an SBA Disaster Loan: For a disaster loan made between January 31, 2020 and April 3, 2020 must be refinanced as a PPP loan if it was used for payroll costs.