The United States Department of the Treasury (“Treasury”) has released the Application Form HERE for loans under the Paycheck Protection Program. Now the process of accessing these funds begins in earnest. The early indication is that this process may not be straightforward. As we have previously indicated, existing SBA-certified lenders will be the primary points of contact for processing Paycheck Protection Loans. These lenders appear to be limiting access to their existing customer base. At this stage, the requirements and processes of these lenders suggest that they are concerned both with complying with the statutory requirements and limiting their actual or perceived exposure, which may result in lenders imposing information or other requirements that are more extensive than those required by the program’s authorizing statute.
Moreover, the application and accompanying instructions published by the Treasury and SBA fail to provide guidance on some important issues, including how a consolidated group applies for the program, how the limitation on costs related to employees earning in excess of $100,000 is calculated and applies to proceeds, and what supporting documentation is required. It is unclear whether additional Treasury or SBA guidance will be issued, whether a consensus on these issues will emerge from the lender group, or whether these matters will be somehow resolved by individual lenders as they process applications. We will continue to monitor this process.
We are advising clients to apply to the program through their existing commercial bank, if that bank is an SBA-certified lender. This may avoid any delay that would result from the new customer diligence that a new lender would require. It is possible that banks will be overwhelmed by the demand for Paycheck Protection Loans, so it will be very important to have a strong bank relationship and to aggressively pursue the processing of your application.
If you do not have an existing relationship with an SBA-certified lender, or if for any reason you need to access a different SBA-certified lender, please contact us and we will endeavor to assist you in identifying an SBA-lending point of contact.
We will continue to send periodic updates on topics that may be helpful to your businesses. Our prior COVID-19 updates are available HERE. If you have a particular issue that you’d like us to address, please let us know.
Feel free to contact us with any questions.
Gery Chico and Jon Leach