On May 21, 2020, the Small Business Administration (SBA) issued guidance to Paycheck Protection Program (PPP) lenders on how they are to collect loan processing fees under the program.

The SBA will pay fees to lenders for processing eligible PPP loans at the following rates, based on the balance of the loan outstanding at the time of full disbursement:

  • 5% for loans under $350,000
  • 3% for loans between $350,000 and $2 million
  • 1% for loans over $2 million

In order to collect the processing fee, a lender must submit a Form 1502 for all its PPP loans by May 29 or 10 days after the loan is disbursed or canceled, whichever is later. The lender, or their service providers, must have an existing account or create a new account with the SBA’s fiscal transfer agent, Colson Services. For those that do not already have an account, they should email enrollment@colsonservices.com with the needed information outlined in the guidance.

Lenders must submit separate 1502 reports for PPP and other 7(a) program loans. For PPP loans that have been sold, the originating lender is responsible for the initial Form 1502 submission.

Lenders will not receive processing fees for PPP loans in the following circumstances:

  • Prior to full disbursement of the loan
  • If the loan is cancelled before disbursement
  • If the PPP loan is cancelled or voluntarily terminated, and repaid after disbursement but before the borrower certification safe harbor date of May 18, 2020
  • If the PPP loan is cancelled, terminated or repaid after disbursement (and after the borrower certification safe harbor date of May 18, 2020) because the SBA conducted a loan review and determined the borrower was ineligible for a PPP loan

Upon receipt of a completed set of SBA Form 1502 data, the SBA will:

  • Confirm no previous request has been made for a processing fee on the loan, and no processing fee payment has been made previously by SBA on the loan.
  • Verify the disbursed amount reported on the 1502 report matches the approval amount in E-Tran.
  • Calculate the processing fee owed based on the final fully disbursed amount entered by the lender.
  • Submit the fee calculated by SBA to the Lender using the ACH credit information provided by the Lender.

It is important to note, the SBA will require processing fees to be repaid if it is determined that either the borrower was ineligible to receive a PPP loan within one year after loan disbursement or the lender has not fulfilled its obligations under the PPP.

Doeren Mayhew’s Financial Institutions Group is here to help guide you through these challenging times. Contact us with any questions you may have in regards to your PPP loans.