Image

Who is really winning?


Hero logo
19-01-21-12-36-14-75capital_19012021-03.jpg

While this latest round of bailouts is not designed to bail out the banking system, they might just be the biggest beneficiary of the PPP loan.  The limit for any small business to receive from the PPP is $10 Million, but the banks that administer, and process the loans will receive approximately $10 Billion in fees.

PAYCHECK PROTECTION PROGRAM (PPP) INFORMATION SHEET LENDERS

Who is eligible to lend? All existing SBA-certified lenders will be given delegated authority to speedily process PPP loans. All federally insured depository institutions, federally insured credit unions, and Farm Credit System institutions are eligible to participate in this program.

  • New lenders that are federally insured depository institutions, federally insured credit unions, or Farm Credit System institutions will need to submit their application to DelegatedAuthority@sba.gov to apply. Non-bank and non-insured depository institution lenders can also begin making loans as soon as they are approved and enrolled in the program.
  • New lenders that are non-bank or non-insured depository institution lenders will need to submit their application to NFRLApplicationForPPP@sba.gov to apply.

Are these loans guaranteed by the SBA? Yes, the (1)SBA guarantees 100% of the outstanding balance, and that guarantee is backed by the full faith and credit of the United States. What underwriting is required? As explained in the PPP Interim Final Rule, you will need to confirm receipt of borrower certifications; confirm receipt of information demonstrating that a borrower had employees for whom the borrower paid salaries and payroll taxes on or around February 15, 2020; confirm the dollar amount of average monthly payroll costs; and follow applicable Bank Secrecy Act requirements. Lenders are permitted to rely on borrower certifications and representations as explained in the PPP Interim Final Rule and FAQ guidance.

How will lenders be compensated? Processing fees will be based on the balance of the financing outstanding at the time of final disbursement. SBA will pay lenders fees for processing PPP loans in the following amounts:

  • Five (5) percent for loans of not more than $350,000;
  • Three (3) percent for loans of more than $350,000 and less than $2,000,000; and
  • One (1) percent for loans of at least $2,000,000.
  • Lenders may not collect any fees from the applicant.

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

How will agents be compensated? Agent fees will be paid out of lender fees. The lender will pay the agent. Agents may not collect any fees from the applicant. The total amount that an agent may collect from the lender for assistance in preparing an application for a PPP loan (including referral to the lender) may not exceed:

  • One (1) percent for loans of not more than $350,000;
  • 0.50 percent for loans of more than $350,000 and less than $2 million; and
  • 0.25 percent for loans of at least $2 million.