SBA Guaranty Purchases and Lender Servicing Responsibilities for PPP Loans
A recent Small Business Administration Servicing Guidance provides helpful new information that should assist lenders in determining further servicing actions under the Paycheck Protection Program loans, including how to proceed in the context of borrower bankruptcy filings. The authors of this article discuss the guidance.
The U.S. Small Business Administration (the “SBA”) recently issued important new guidance (SBA Procedural Notice 5000-812316, SBA Guaranty Purchases and Lender Servicing Responsibilities, effective July 15, 2021 (the “SBA Servicing Guidance”)) regarding the servicing of loans extended under the Paycheck Protection Program, which was initially established pursuant to the Coronavirus Aid, Relief, and Economic Security Act (the “PPP loans”). The purpose of the SBA Servicing Guidance is to reinforce certain servicing responsibilities that lenders have regarding PPP loans under the SBA’s existing rules and regulations (collectively, the “Program Requirements”), and to advise lenders of the guaranty purchase process required for the SBA to honor its 100 percent guaranty on each PPP loan.
To read the full article, please click here.
“SBA Guaranty Purchases and Lender Servicing Responsibilities for PPP Loans,” by Martin Teckler and Grant E. Buerstetta was published in November/December 2021 edition of The Banking Law Journal (Vol. 138, No. 10), an A.S. Pratt Publication. Reprinted with permission.
This article was first published as a Blank Rome Finance, Restructuring, and Bankruptcy client advisory in July 2021.