Paycheck Protection Program- Additional Help Available for Stressed Lenders
This blog is posted on behalf of Charlie Cameron, Managing Principal of our Financial Institution Group.
The U.S. Department of the Treasury released additional guidance regarding the Paycheck Protection Program (“PPP”) on March 31, 2020. Included in the guidance was clarification regarding payment of fees to agents that provide assistance in preparing an application for a PPP loan. Additionally, clarification was provided regarding who can be an agent.
Because many financial institutions are experiencing strong interest from current borrowers, as well as potential new borrowers to their institution, they are evaluating the need and benefit of seeking the assistance of agents to help ensure more accurate data submission, ensure program compliance, and improve timeliness of application submissions. CLA is here to help financial institutions through the PPP process.
What is the PPP?
The PPP offers forgivable loans to small businesses, non-profits, and certain other employers to allow them to continue to pay their employees during the COVID-19 crisis. The loan amounts are pre-set by the program at 2.5 times the businesses average monthly payroll costs, which includes certain related taxes and benefits with a total loan amount not of up to $10 million.
Loans may be forgiven if borrowers use the funds to cover payroll costs, mortgage interest, rent, and utilities over an eight week period after getting the loan.
Who can be an agent?
An agent is an authorized representative and can be:
- An attorney;
- An accountant;
- A consultant;
- Someone who prepares an applicant’s application for financial assistance and is employed and compensated by the applicant;
- Someone who assists a lender with originating, disbursing, servicing, liquidating, or litigating SBA loans;
- A loan broker; or
- Any other individual or entity representing an applicant by conducting business with the SBA.
What are the limits for agent fees?
Agent fees will be paid out of the lender processing fees paid by the SBA. The lender will pay the agent. Agents may not collect any fees from the applicant.
The Treasury has issued the following tiered limits on agent fees, determined as a percentage of the amount of the loan at origination and the size of the loan:
- Loans $350,000 and under: 1.00%
- Loans greater than $350,000 to $2 million: 0.50%
- Loans greater than $2 million: 0.25%
How can CLA help?
We know ramping up a new lending process during this already challenging time may feel like a daunting task. CLA is here to help. Our assistance related to the PPP can include the following:
- Assistance with preparing SBA PPP loan applications and supporting materials.
- Assistance with preparing a report of the expected forgiveness amount on loans originated under the PPP.
- Assistance with the applications of the borrowers to the lending institution for forgiveness of loan amounts originated under the PPP.
We stand ready to assist you and your borrowers during the PPP application process. Please contact us.
Amanda Garnett is a principal in the financial institutions practice of CliftonLarsonAllen (CLA) from Peoria, Illinois. She currently leads the firm’s Midwest financial institution tax team and serves institutions ranging in size from $15 million to $3.5 billion in total assets. In addition to tax compliance, Amanda assists clients in the areas of tax consulting, mergers and acquisitions, and regulatory reporting. She also routinely teaches courses for banking associations across the country.
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