April 29, 2020
SBA Gives Lenders 10 Days to Disburse Loans in Full
To try and speed the processing of much-needed relief loans under the federal Paycheck Protection Program (PPP), the Small Business Administration (SBA) just issued a fresh interim final rule as part of ongoing efforts to tweak the balky but much-needed program.
The rule requires lenders to make a one-time, full disbursement of PPP funds within 10 calendar days of a loan being approved. A loan is officially considered approved when it receives an SBA loan number. If the 10th day should fall on a weekend or federal holiday, the disbursement deadline is bumped to the next business day.
For all SBA-approved loans that have not yet had their funds disbursed, the 10-day period is considered to have begun yesterday, Tuesday April 28. Banks have complained that the SBA’s processing system for PPP loans is responsible for the bottleneck in getting funds released, saying they are having trouble getting applications accepted by the SBA system.
The rule still leaves borrowers responsible for delays; the SBA says that lenders are not responsible for delays disbursement delays caused by borrowers who don’t supply required loan documentation on time, including signed promissory notes. If a borrower fails to provide requirement documentation within 20 days of loan approval, the loan will be cancelled.
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