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Following enactment of Phase 4 coronavirus relief provisions last week, the Small Business Administration (SBA) has released two new interim final rules (IFRs) to address changes to the paycheck protection program (PPP) made by the Economic Aid Act, as well as guidance for providing minority-, underserved-, veteran- and women-owned businesses with access to capital through the program.

Federal banking regulators, including the NCUA, are offering an interagency webinar for lenders Monday featuring officials from the SBA and Treasury Department to review:

• the timeline for the rollout of new PPP loan programs;
• details of the PPP loan programs, including first- and second-draw loans; and
• new forms and guidance.

Registration for the webinar, set to begin at 2 p.m. Eastern Monday, is now open. The agencies request that only two participants from each lending institution register to ensure broad access to the webinar. Questions for the Q&A portion of the webinar can be submitted in advance via email.

Since the PPP launched in April 2020 under the CARES Act, NAFCU has consistently advocated for additional guidance and resources to ensure credit unions could lend effectively through the program. The Phase 4 relief provisions related to the PPP included several NAFCU-sought items, including:

• language to simplify the forgiveness process for loans under $150,000 and to provide protections for lenders;
• set asides for small, community-based lenders – including credit unions – with less than $10 million in assets;
• set asides for smaller business borrowers and the ability for these businesses that previously received a PPP loan to apply for a second loan; and
• a repeal of the CARES Act provision that required PPP borrowers to deduct from their forgivable amount economic injury disaster loan (EIDL) advances, which NAFCU had raised concerns about.

While the PPP portal has not yet reopened to begin accepting applications again, the SBA's guidance stated that it will only accept PPP applications from community financial institutions for at least the first two days of the portal reopening. There will also be dedicated processing hours for these institutions, similar to the initial rounds of funding.

Here are some key insights from the new IFRs:

Second Draw Loans

• authorized through March 31, 2021;
• lenders approved to make initial PPP loans may make second-draw loans under the same terms and conditions;
• 100 percent guaranteed by the SBA under the same general conditions as the original PPP loans, including no collateral or personal guarantee required, and loan maturity of 5 years;
• borrowers must have already received a PPP loan and exhausted those initial funds;
• borrowers must have 300 or fewer employees and have experienced a revenue reduction;
• if the loan amount is over $150,000, the borrower must submit documentation establishing the revenue reduction of 25 percent at time of application;
• if the loan amount is under $150,000, the borrower does not need to submit documentation establishing the revenue reduction of 25 percent until on or before the borrower applies for loan forgiveness; and
• if the borrower's initial PPP loan is under review by the SBA and/or information n the SBA's possession indicates that the borrower may have been ineligible for the initial loan, the lender will receive a notification from the SBA when the application is submitted and no SBA loan number will be given until the initial PPP loan issues are resolved.

Economic Aid Act PPP Amendments

• consolidates the IFRs and other guidance issued to date that govern borrower eligibility, application and origination requirements, loan increases and forgiveness;
• governs any new PPP loan made under the Economic Aid Act and loan forgiveness requests on existing PPP loans where forgiveness has not yet been remitted;
• reauthorizes the PPP through March 31, 2021; and
• new PPP borrowers may calculate their maximum loan amount by using payroll costs incurred in 2019 or 2020.

The SBA is expected to update its PPP FAQs to conform with the Economic Aid Act and provide additional guidance soon. NAFCU will also continue to update its PPP FAQs with information from the new IFRs and guidance.

Relatedly, President-elect Joe Biden announced Thursday he intends to nominate California's Office of the Small Business Advocate Director Isabel Guzman to lead the SBA in his administration.