Includes set-asides for first-time borrowers, smaller lenders
Lawmakers directed at least $35 billion to be used to guarantee loans for first-time PPP borrowers. They also set aside pots of money for other specific uses, including:
- $15 billion for initial and second-draw PPP loans issued by community financial institutions, including Community Development Financial Institutions (CDFIs) and Minority Depository Institutions (MDIs)
- $15 billion for insured depository institutions, credit unions, and Farm Credit System institutions with less than $10 billion in assets
- At least $15 billion for guaranteeing loans of up to $250,000 to an eligible recipient in a low- or moderate-income neighborhood under the Community Reinvestment Act or for loans made to recipients with no more than 10 employees
Fee structure for lenders is changing
Lender reimbursement for processing and servicing PPP loans also changes under the PPP extension and expansion. For first draw loans up to $50,000, lenders will receive the lesser of 50 percent of the balance of the financing outstanding at the time of disbursement of the covered loan or $2,500.
For loans above $50,000, lenders will be paid a percentage of the balance of the financing outstanding at the time of covered loan’s disbursement.
- 5 percent for a covered loan of more than $50,000 and not more than $350,000; and
- 3 percent for a covered loan of more than $350,000 and less than $2 million; and
- 1 percent for loans of $2 million or more.
For second draw loans, the fees are the same except the percentage is 3 percent for covered loans above $350,000.
According to the Interim Final Rule describing the changes to the PPP from the Economic Aid Act, the SBA will pay the lender fee five days after the reported disbursement of the PPP loan. Also, the law requires that the SBA may not require that the fee be repaid by the lender unless the lender is found guilty of an act of fraud in connection with the PPP
Under the current PPP fee structure, SBA lenders are also paid based on the balance of outstanding financing at the time of disbursement of the covered loan:
- 5 percent for loans up to $350,000.
- 3 percent for loans of more than $350,000 and less than $2,000,000
- 1 percent for loans of not less than $2,000,000
When the new PPP lending window opens
Community Development Financial Institutions (CDFIs), Minority Depository Institutions, Certified Development Companies and Microloan Intermediaries could begin submitting applications for first draw loans to the SBA online portal, E-Tran, on Jan. 11. The portal opened Jan. 13 to those institutions for second draw loans. It opens Jan. 15 to PPP-eligible lenders with $1 billion or less in assets submitting first and second draw loans, and to all other lenders on Jan. 19 for applications for first and second draw loans. Stay tuned to Abrigo's PPP resources page for lenders for other developments on SBA regulations and guidance.