A Procedural Notice has been released by the SBA to it’s employees, as well as PPP lenders related to First Draw PPP Loan increases. Under the Economic Aid Act (EAA) in the Consolidated Apportionment Act (CAA 2021), certain borrowers may request an increase under certain conditions:

First Draw Paycheck Protection Program Loan Increases After Enactment of the Economic Aid Act, 1/13/2021 

SBA Procedural Notice Control No. 5000-20076

Increase to a First Draw PPP Loan

The Economic Aid Act (EAA) permitted certain borrowers to re-apply or request an increase to a First Draw PPP Loan approved on or before 8/8/2020. In general, increases in the loan amount:

• may not exceed the maximum loan amount the borrower is entitled to under PPP rules, and
• may not exceed a total of $10 million for an individual borrower or $20 million for a corporate group.

There is documation that is required to be submitted in substantiation of the increase. The lender is required to electronicall submit the request for the increase on or before March 31, 2021. Fullfillment of requests are subject to the availability of funds. 

Partnerships

A request to increase a First Draw PPP Loan may be made if the SBA has not remitted a forgiveness payment to the Lender on that loan. It is allowable for the increase to include appropriate partner compensation even if the loan has been fully disbursed.

Seasonal Employers

EAA made revisions to the method that seasonal employers use to determine their maximum loan amount. Seasonal employers are now afforded the ability to use the average total monthly payments for payroll for any 12-week period selected by the seasonal employer beginning 2/15/19, and ending 2/15/20. A seasonal employer may request an increase to a First Draw PPP Loan if

• the SBA has not remitted a forgiveness payment to the lender on that loan and,
• if using the new method under the EAA, the seasonal employer calculates a higher loan amount than under the prior method.

Farmers and Ranchers

EAA changed the calculation of the maximum loan amount for certain farmers and ranchers. If:

• the SBA has not remitted a forgiveness payment to the Lender, and
• the farmer or rancher would be eligible for a higher maximum loan amount based on the new calculation method, the borrower may request an increase.

Other borrowers

Other borrowers may also be eligible for PPP loan increase or may re-apply under these circumstances:

Eligible Borrowers that repaid a First Draw PPP Loan in full prior to 12/27/20

Borrowers who fully repaid their PPP loan for which the SBA has not submitted a forgiveness payment to the lender, may reapply for a new First Draw PPP Loan for the amount the borrower may be eligible under the current PPP rules.

Borrowers that returned a portion of a First Draw PPP Loan prior to 12/27/20

Borrowers who returned or otherwise repaid a portion of a First Draw PPP Loan for which the lender reported to the SBA prior to 12/27/20, that the loan was repaid in part, and the SBA has not remitted a forgiveness payment. In this case, the lender may re-disburse funds equal to the amount in excess of the amount previously approved, and the amount retained by the borrower.

Borrowers that did not accept the full amount of a First Draw PPP Loan for which they were otherwise approved

Borrowers who did accept, prior to 12/27/20, the full amount of an approved First Draw PPP Loan for which the SBA has not remitted a forgiveness payment to the lender, may request an increase in the amount of the First Draw PPP Loan up to the previously approved amount previously.

Availability of First Draw PPP Loan Increases

Lenders are allowed to approve increases on First Draw PPP Loans beginning 1/25/2021.

(This is Blog Post #958)