US National Capitol

On December 27, 2020, as part of a larger government funding bill, President Donald J. Trump signed into law the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act (the “Act”). The Act, among other things, restarts the Paycheck Protection Program (“PPP”), as administered by the Small Business Administration (“SBA”), provides borrowers with greater flexibility in using PPP loan proceeds and expands the types of expenses eligible for loan forgiveness. The following is a summary of these provisions; however, please note that the SBA is required to issue implementing regulations by January 6, 2020 and we expect further guidance on the Act’s provisions at that time.Continue Reading It’s Back: Paycheck Protection Program 2.0

Bank Vault

Markets like certainty.  On July 20, 2020, the Office of the Comptroller of the Currency (the “OCC”) proposed a new rule for national banks and federal savings associations that would solve the “true lender” question and help bring certainty to financial markets.  Under the proposed rule, a bank will be deemed the “true lender” in a bank partnership model if it is either (i) the named lender in the underlying loan agreement or (ii) the party that funds the loan.
Continue Reading OCC Proposal Would Bring Certainty to the Identity of the “True Lender”

Image of United States Capitol BuildingOn May 28, 2020, the U.S. House of Representatives passed legislation that, if adopted by the Senate and signed into law by the President, would provide considerable relief to borrowers under the Paycheck Protection Program (PPP).

The bill, known as the Paycheck Protection Program Flexibility Act of 2020 (PPPFA), amends the original Coronavirus Aid, Relief, and Economic Security (CARES) Act to loosen restrictions placed on PPP loans, making them more favorable for borrowers.Continue Reading UPDATE: U.S. House of Representatives Seeks to Amend the CARES Act to Provide Borrower’s Relief under the PPP

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”).
Continue Reading Paycheck Protection Program Loans May Be Excluded from a Bank’s Regulatory Capital Ratios