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SBA Issues Rules on PPP Loan Forgiveness, Lender ResponsibilitiesThe Small Business Administration last Friday night released much-anticipated interim final rules describing the loan forgiveness process, as well as lenders’ and borrowers’ responsibilities, for the Paycheck Protection Program. For PPP loans to be forgiven under the rules, lenders must confirm that they received the borrower certifications in the loan forgiveness application form and the borrower documentation required by the form. They must also confirm the borrower’s calculations on the forgiveness application. “Lenders are expected to perform a good-faith review, in a reasonable time, of the borrower’s calculations and supporting documents concerning amounts eligible for loan forgiveness,” SBA said, noting that “minimal review” of calculations based on a payroll processor’s report would suffice. “If the lender identifies errors in the borrower’s calculation or material lack of substantiation in the borrower’s supporting documents, the lender should work with the borrower to remedy the issue,” SBA added. However, the rules do not require the lender to “independently verify the borrower’s reported information if the borrower submits documentation supporting its request for loan forgiveness and attests that it accurately verified the payments for eligible costs.” Lenders must report their decisions on forgiveness applications to SBA within 60 days of receiving a complete application and must provide supporting documentation for their decisions. The rule on the forgiveness process includes details on several technical questions related to employee status, payroll calculations and forgiveness-eligible non-payroll expenses. ABA staff are reviewing these rules closely and will provide feedback to SBA. To share questions or comments with ABA, email [email protected].
SBA Releases Long-Awaited Guidance on Form 1502 for PPP Processing FeesThe Small Business Administration last Thursday issued guidance to Paycheck Protection Program lenders on filing Form 1502, which will trigger the payment of PPP loan processing fees to lenders. SBA began accepting Form 1502 filings last Saturday; lenders must submit Form 1502 data for all PPP loans by May 29 or 10 calendar days after the loan is disbursed or canceled, whichever is later. To file Form 1502, lenders—or their service providers—must have an existing account or create a new account with SBA’s fiscal transfer agent, Colson Services. The guidance provides details on how to access Colson’s lender portal and submit Form 1502 data. Lenders must submit separate 1502 reports for PPP and other 7(a) program loans. For PPP loans that have been sold, the originating lender is responsible for the initial Form 1502 submission. While lenders must file Form 1502 data for all PPP loans disbursed or canceled, lenders will not be paid if the PPP loan is canceled before disbursement or if the loan was canceled or voluntarily terminated after funds were disbursed and repaid by May 18. SBA said that it will not pay processing fees for PPP loans canceled, terminated or repaid due to an SBA loan review finding the borrower ineligible. The agency added that lender processing fees may be clawed back within a year after disbursement if SBA later determines the borrower to be ineligible, although this determination will not affect the SBA guaranty for the loan, provided the lender “has complied with its obligations under section III.3.b of the initial PPP Interim Final Rule.” Read the guidance
USDA to Guarantee $1 Billion in Loans for Rural Businesses, Ag ProducersWith many rural businesses and agricultural producers facing financial challenges as a result of COVID-19, the Department of Agriculture last Friday announced that it will make available up to $1 billion in loan guarantees for these entities through Farm Service Agency loan programs and through the USDA Business and Industry CARES Act Program, a new program that provides working capital loans to help rural businesses prevent, prepare for or respond to the effects of the pandemic. Under these changes, agricultural producers that are not eligible for FSA programs will be eligible for B&I CARES Act Program loans. Additionally, USDA said it will provide 90% guarantees on B&I CARES Act Program loans and extend the maximum term for working capital loans to 10 years. It will also set the application and guarantee fee at 2% of the loan, accept appraisals completed within two years of the loan application date and not require discounting of collateral for working capital loans. Rural businesses that were operational as of Feb. 15, 2020, may take advantage of B&I CARES Act Program loans. Loan applications will be considered in the order they are received, though USDA noted that it may give priority to certain projects if the demand for funds exceeds availability. USDA will host two upcoming webinars for borrowers and lenders on the B&I CARES Act program. The first webinar will take place on May 27 at 2:30 p.m. CDT, and the second webinar will be held on June 3 at 1 p.m. CDT. Learn more Otting Announces Departure from OCC; Brooks to Serve as Acting ComptrollerComptroller of the Currency Joseph Otting last Thursday announced that he would step down on May 29. Brian Brooks, a former vice chairman at OneWest Bank and general counsel at Fannie Mae who joined the OCC last month as first deputy comptroller and COO, will serve as acting comptroller upon Otting’s departure. Otting’s exit from the agency comes just after the OCC moved unilaterally to finalize its Community Reinvestment Act modernization proposal—a longstanding priority for Otting since he became comptroller in November 2017. “On his watch, Comptroller Otting took important actions that will help stabilize and grow the economy, and he started the long-overdue national conversation on modernizing CRA rules,” said ABA President and CEO Rob Nichols. “We welcomed his interest in hearing from all stakeholders, and we know the OCC will continue in that spirit when Brian Brooks takes over as acting comptroller.” Read more. ABA Seeks Feedback on Banks' COVID-Relief EffortsAs ABA works to document the industry’s response to the coronavirus pandemic, the Association continues to ask banks to respond to a short survey to provide details about their response efforts. Specifically, ABA is seeking information on the number of PPP loan applications they received, processed and disbursed; the number of jobs saved; any relief measures offered by the institution to customers outside of the PPP; any charitable donations made by the bank to help communities affected by COVID-19; and any positive customer anecdotes. Responses will remain anonymous and will be used to inform ABA’s ongoing communications efforts and policy response related to the coronavirus. Take the survey. For more information, contact ABA’s Meredith Pollock SDBA Can Help Form Virtual Peer GroupsDuring this time of social distancing, are you looking for a way to connect with colleagues in your role in other banking organizations across the state? How about an opportunity to exchange thoughts and bounce ideas off one another? The SDBA is here to assist you in connecting. If you would like to form a virtual “peer group” with your colleagues, we can help you connect and get started. Just drop an email to Halley Lee, SDBA administrative vice president, at [email protected], and the SDBA will help you get set up. Other groups already in progress include compliance and human resources. Other possibilities for peer groups include technology, marketing, agriculture, education and more.
Dakota School of Lending Principles RescheduledThe Dakota School of Lending Principles, which was scheduled for April 2020, has been rescheduled for April 6-9, 2021, in Bismarck, N.D. The schedule for the school is:
The North Dakota Bankers Association, who is hosting the school, will transfer those who were registered for the 2020 school to the new 2021 dates. Those who were registered but prefer a refund should contact the NDBA office at 701.223.5303. Be watching for registration materials for the new dates. Promontory to Offer Webinar on Opportunities for BanksVolatility is not the end of opportunity. Perhaps surprisingly, these unprecedented times offer a unique opportunity for your bank to bolster customer confidence and strengthen relationships while at the same time enhancing its brand and growing franchise value Promontory Interfinancial Network is offering the free webinar "Opportunities for Your Bank and Safety for Your Customers—Build Customer Confidence and Franchise Value Now" on June 2 and June 4. Reserve your seat in the webinar to discover how your bank can capitalize on customer flights to safety and:
Register for the Thursday, June 4, webinar at 2 p.m. CDT Question of the Week
Question: This is a HMDA question. Borrower was scheduled for closing, but because a home inspection that the borrower ordered did not go as they planned, the borrower ended up cancelling closing. The bank did not require this inspection and all underwriting conditions had otherwise been met. In looking at the HMDA Action Taken guidance, which do you think we should report in this situation? Answer: It appears that this situation should be reported as Approved but not Accepted based on what you describe, and you can find this reflected in the commentary here: If all the conditions (underwriting, creditworthiness, or customary commitment or closing conditions) are satisfied and the institution agrees to extend credit but the covered loan is not originated, the institution reports the action taken as application approved but not accepted. Not a member? Learn more about membership with Compliance Alliance by attending one of our live demos: Compliance rules and regulations change quickly. For timely compliance updates, subscribe to Compliance Alliance’s email newsletters. Compliance Alliance offers a comprehensive suite of compliance management solutions. To learn how to put them to work for your bank, call 888.353.3933 or email and ask for our Membership Team. SDBA eNews Archive Advertising Opportunity Questions/Comments |
