Since April 3, 2020, the Small Business Administration (SBA) has approved more than 100,000 small business applicants for the new Paycheck Protection Program (PPP) loans. Despite the high number of approved applicants, few loans have been disbursed due to lender uncertainty as to how PPP loans will be closed. The SBA took steps this week to remedy this issue by providing further guidance to lenders on the authorization form used to document the terms of a loan and by generating a form of note for lenders to use at closing.
SBA Documentation for PPP Loans
Participating lenders can begin requesting authorization forms from the SBA for PPP loans. Lenders must submit their requests on the SBA’s online Paycheck Protection Lender Gateway. The lender, through its SBA Connect account on the SBA platform, can easily request and be granted the SBA’s approval of a PPP loan.
As of April 8, 2020, the SBA has uploaded its form of note that participating lenders should use to close PPP loans. The form, known as Form 147 Version 4.1, is virtually identical to the form used for SBA 7(a) loans (here). The streamlined six-page template allows lenders to input the following information derived from its unique loan authorization:
- SBA loan number
- loan name
- loan amount
- interest rate
- date of closing
- borrower name
- lender name
- operating company name
- payment terms
Space is also provided to input state-specific provisions where applicable, such as those concerning confessions of judgment. Lenders should note that despite the new Form 147, the SBA is still permitting them to use their own standard note forms to close PPP loans due to the possibility of updates being made to Form 147 Version 4.1 in the coming days or weeks.