The Small Business Administration (SBA) issued updated Frequently Asked Questions (FAQs) to provide guidance for borrowers and lenders on Paycheck Protection Program (PPP) loans. The SBA also issued updated Frequently Asked Questions on PPP Loan Forgiveness (EIDL FAQs) with guidance on how to treat Economic Injury Disaster Loan (EIDL) advances when determining PPP loan forgiveness.
The SBA will reduce the borrower's PPP loan forgiveness amount by the amount of any EIDL advance. The SBA will deduct this amount from the loan forgiveness amount that it remits to the PPP lender. The lender can confirm the deducted amount of the EIDL advance by reviewing the borrower's EIDL advance information in the PPP Forgiveness Platform.
Partial Loan Forgiveness
If a PPP loan is not forgiven in full (including due to a reduction in the forgiveness amount for an EIDL advance):
The borrower must pay any remaining balance due on the PPP loan by the maturity date of the PPP loan.
The PPP lender must notify the borrower of the loan forgiveness amount and the date the first loan payment is due.
The PPP lender must continue to service the loan.
If a borrower is determined to have been ineligible for a PPP loan for any reason, the SBA may seek repayment of the outstanding PPP loan balance or pursue other available remedies.
EIDL Advance in Excess of PPP Loan
A borrower that received an EIDL advance in excess of the amount of its PPP loan will not receive any forgiveness on the PPP loan, because the amount of an EIDL advance is deducted from the PPP loan forgiveness amount.