The Small Business Administration (SBA) revised their list of frequently asked questions (FAQs) for Paycheck Protection Program (PPP) loan participants and lenders. It includes two new FAQs that clarify how loan fees are treated (FAQ #50) and includes dental and vision benefits in the “payroll cost” definition (FAQ #51).
The first interim final rule (IFR) for PPP loans stated that agents assisting businesses in obtaining PPP loans may collect fees, but these fees are paid by the lenders, not the businesses receiving the PPP loan. As discussed in this article from The American Banker, several lawsuits have been filed by these agents against banks seeking these fees. In the face of these lawsuits, a question arose about the impact of the payment or nonpayment of these fees on the SBA’s guarantee of the related PPP loans. (If the SBA removed its guarantee, then financial institutions could face the very serious credit risk of borrowers defaulting on PPP loans.) FAQ #50 clarifies that the payment or non-payment of fees related to obtaining a PPP loan has no effect on the SBA guarantee. This should be welcomed news for PPP lenders. The agents suing lenders for referral fees, on the other hand, might have preferred to hear that a lender’s failure to pay such fees jeopardized the SBA guarantee.
Payroll costs that support PPP loan forgiveness include amounts paid by an employer for healthcare benefits and health insurance premiums. FAQ #51 clarifies that these costs include amounts paid for “vision and dental benefits.” We have long advised borrowers to include vision and dental benefits as payroll costs when applying for a PPP loan and calculating PPP loan forgiveness. Nonetheless, we appreciate the SBA updating the FAQs to remove any doubt.
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