Under the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act (Economic Aid Act) that was part of the Consolidated Appropriation Act, 2021, signed into law on Dec. 27, 2020, Section 1110(e)(6) of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) was repealed. The Small Business Administration (SBA) recently issued a procedural notice related to this repeal.
What Does the Repeal of Section 1110(e)(6) Mean?
Effective Jan. 8, 2021, the SBA will no longer deduct an Economic Injury Disaster Loan (EIDL) Advance from a Paycheck Protection Program (PPP) forgiveness payment that is remitted to a PPP lender. The SBA had previously stated that this change would be automatic beginning on Dec. 29, 2020.
For loans where the SBA already submitted loan forgiveness amounts to lenders, the SBA will provide the advanced amount previously deducted to the lender. It is the PPP lender’s responsibility to inform PPP borrowers of the SBA’s remittance of an EIDL Advance reconciliation amount.
If there is still a PPP loan amount that remains, the PPP lender must re-amortize the loan and notify the borrower of the updated payment information. In the event the reconciliation amount satisfies the loan in full the PPP lender must notify the borrower the loan has been paid in full, and if the amount remitted is more than what is owed on the loan, the PPP lender must provide the excess funds and any accrued interest paid by the borrower, to the borrower.
For further information, please contact any member of Taft’s SBA Task Force.
Please visit our COVID-19 Toolkit for all of Taft’s updates on the coronavirus.