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June 30th, 2020
PPP Application Process Updates
Here are two important news items for businesses participating in, or seeking to participate in, the Small Business Administration (SBA)’s Paycheck Protection Program (PPP) (which we covered most recently here and here).
UPDATED: Deadline for Applications -- Which Was, Previously, June 30th, 2020 -- Is Likely To Be Extended to August 8th, 2020
The first tranche of PPP loan funding, totaling about $349 billion, was exhausted within a few days of the commencement of the acceptance of loan applications in early April. Demand has not been as strong, however, for the $310 billion second tranche of PPP funding, due perhaps to the smaller average loan size in the second tranche and confusion among borrowers resulting from rule changes. The SBA has reported that as of June 20, about $128 billion in funding remained available for PPP loans.
The SBA had announced that the PPP loan program would close to new applications on June 30, 2020. However, a number of media services (e.g., here and here) are now reporting that the Senate and the House have agreed on legislation extending the application period to August 8th, 2020. An updated application for the PPP loan program, reflecting recent program changes, had been published by the Treasury Department, and is now available here. Potential borrowers can access the lender match tool on the SBA website to find lenders who are still accepting PPP loan applications.
Changes in PPP Loan Program: Release of Borrower Information
The PPP program has evolved in a number of respects since its launch. Between April 2nd and June 25th, more than twenty “Interim Final Rules” and an ongoing series of FAQs have been published by the SBA and the Treasury Department. One evolving issue is whether certain borrower information would be disclosed -- disclosures that could raise public relations concerns for companies and their representatives. The SBA – in a change of policy – has now announced that it will release certain borrower information.
The issue of disclosure arose early following news that several high-profile public companies received PPP loans – some in the millions of dollars. Largely in response to that attention, the Treasury Department announced, in a series of guidances and other statements in late April and early May, that loans in excess of $2 million would be subject to an automatic review by the SBA to confirm borrower eligibility. Following these pronouncements, however, pressure to provide “greater transparency” regarding the PPP loan program has continued to be exerted on the SBA and the Treasury Department (including bipartisan political pressure). This pressure ultimately led to the announcement on June 19th by Treasury Secretary Steven Mnuchin and SBA Administrator Jovita Carranza that, in a reversal of the Treasury Department’s prior position, the SBA would disclose information about each business that has borrowed over $150,000, including business name, address, NAICS code, zip code, business type, demographic data, non-profit information, and jobs supported. At present, the SBA does not plan to disclose a borrower’s specific loan amount; rather, SBA disclosures will group borrowers by ranges in loan amounts ($150,000 to $350,000; $350,000 to $1 million; $1 million to $2 million; $2 million to $5 million; and $5 million to $10 million). For loans below $150,000, information would only be provided in aggregate form, by categories such as zip code, industry, business type, and various demographic categories.
We will continue to monitor developments in the PPP. If you have questions about the PPP program, or about other CARES Act developments, please contact Jay Rand at 212 705 4825 or firstname.lastname@example.org, Deborah Wolfe at 212 826 5573 or email@example.com, Tricia Legittino at 310 579 9632 or firstname.lastname@example.org, Wendy Stryker at 212 705 4838 or email@example.com, or any other member of the Frankfurt Kurnit Corporate and Employment Groups.