April 22, 2021

SBA's 2nd Notice: Everything You Need to Know About the Extended Paycheck Protection Program

On April 8th, the Small Business Administration issued a Second Notice to lenders regarding an important modification made to the March 30, 2021 SBA Procedural Notice 5000-20074 and SBA Forms 3506, 3507, and 750.The modification contains a key restriction, “which provides from that from June 1, 2021 through June 30, 2021, SBA shall not accept new Paycheck Protection Program (“PPP”) Loan guaranty applications from lenders and shall only process PPP Loan guaranty applications submitted by lenders to SBA before June 1, 2021.”

On April 8th, the Small Business Administration issued a Second Notice to lenders regarding an important modification made to the March 30, 2021 SBA Procedural Notice 5000-20074 and SBA Forms 3506, 3507, and 750.The modification contains a key restriction, “which provides from that from June 1, 2021 through June 30, 2021, SBA shall not accept new   Paycheck Protection Program (“PPP”) Loan guaranty applications from lenders and shall only process PPP Loan guaranty applications submitted by lenders to SBA before June 1, 2021.”

In addition to the modification, the SBA also clarified the guidelines  on loan eligibility for those currently involved in a bankruptcy. Specifically for the individuals with a Chapter 11 bankruptcy,  the court order confirming the Plan must be entered for an entity to no longer be considered involved with the Bankruptcy. The order must also be entered prior to the date of the PPP loan application. 

The extension allows the SBA to guarantee PPP loans through 12 am EDT on June 30, 2021 for applications submitted by 12 am on June 1, 2021

While the SBA has been granted an extension to guarantee PPP loans through June 30, 2021, processing of any PPP loan guaranty applications that have not already been issued with SBA loan numbers will cease at 12:00 AM, EDT on June 1, 2021. A participating PPP Lender or a 7(a) lender authorized to make PPP loans can continue to submit PPP Loan guaranty applications through the SBA’s platform until 11:59 pm EDT on May 31, 2021.

This additional month gives the SBA and its lenders time to resolve any hold codes or compliance check error messages. However, all dates and times are subject to the availability of funds. If funds are no longer available, dates may be revised.

Conclusion

The PPP Extension Act of 2021 extended the deadline for lender submission of PPP loans from April 1, 2021 to June 1, 2021, and gave the SBA an additional month to guarantee the submitted loan applications.

The SBA then made the necessary call to shut down their platform to provide enough time to process the additional loan applications and deal with any hold codes or compliance check error messages.

In addition, already approved lenders do not have to go through any additional steps of signing the newly revised forms with new time guidelines. Rather, only new lenders will have to sign the applicable revised forms.

You can find the revised SBA Forms 3506 and 3507 on the SBA’s website.