On May 21, 2020, the U.S. Small Business Administration (“SBA”) released a notice informing lenders of how they may collect loan processing fees for eligible loans issued under the Paycheck Protection Program (“PPP”).
Pursuant to the CARES Act and the Interim Rule, issued by the SBA on April 2, 2020, the SBA will pay fees to lenders for processing eligible PPP loans at the following rates, based on the balance of the loan outstanding at the time of full disbursement:
- 5% for loans under $350,000;
- 3% for loans between $350,000 and $2 million; and
- 1% for loans over $2 million.
However, in order to collect the processing fee on a PPP loan, a lender must first report to the SBA that a loan has been fully disbursed using SBA Form 1502. The SBA will begin accepting these reports on fully disbursed PPP loans on May 22, 2020. Once the report is received, the SBA will initiate the process of paying the PPP processing fee for which the lender is eligible.
Continue Reading SBA Announces Procedure for PPP Lenders to Collect Loan Processing Fees
On April 9, 2020, the Federal Deposit Insurance Corporation, the Board of Governors of the Federal Reserve System (the “Federal Reserve”), and the Office of the Comptroller of the Currency (collectively, the “federal banking agencies”) issued an interim rule that permits banks to neutralize the regulatory capital effects of participating in the Federal Reserve’s Paycheck Protection Program Lending Facility (the “PPPL Facility”).
On April 6, 2020, the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation and the Board of Governors of the Federal Reserve System (collectively, the “federal banking agencies”) announced the issuance of two interim final rules to provide temporary relief to community banks. The federal banking agencies acted to implement Section 4012 of the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), which requires the federal banking agencies to temporarily lower the community bank leverage ratio (“CBLR”) to eight percent (8%).
Over the past two weeks, we have received numerous inquiries from financial institutions on what actions should be taken or considered to address the COVID-19/Coronavirus pandemic. While every bank is different and the current situation is evolving each day, we have engaged in numerous discussions with banks on various strategies and considerations that are being reviewed or implemented during this uncertain time.