Payroll Protection Program- Sweeteners for Lenders and Agents

Late Friday night, the Treasury Department published guidance for lenders and borrowers. While it might cloud the eligibility of many borrowers, it provided lenders sweeteners and guarantees.

In essence:

1. All loans made by lenders are 100% guaranteed by the Small Business Administration (SBA)
2. With waived guarantee fees, i.e., lenders do not need to pay SBA for the 100% guarantee, in contrast to the mortgage guarantee program
3. Lenders will be compensated for up to 5% (the processing fee, not to be confused with the interest)by the SBA for making such loans to small business, in addition to the interest rate charged by the lender for such loans (both the interest rate and the forgiveness standards are published and mandated by the Treasury Department and is the same for all loans)
4. Agents for such loans (intermediaries who bring borrowers and lenders together) will be compensated for up to 1% by the SBA.
5. A secondary market for PPP loans is allowed.

Resources:

https://home.treasury.gov/system/files/136/PPP%20Lender%20Information%20Fact%20Sheet.pdf