SBA No Longer Deducting EIDL Advances from PPP Forgiveness

By Jessica Jeane, J.D. posted 01-08-2021 05:51 PM


Jessica L. Jeane, J.D.
Director of Public Policy & Strategic Communications
January 8, 2021

The U.S. Small Business Administration (SBA) is no longer deducting Economic Injury Disaster Loan (EIDL) Advances from Paycheck Protection Program (PPP) loan forgiveness payments remitted by the SBA to PPP lenders.

In a January 8 Procedural Notice issued to SBA employees and PPP lenders, the SBA stated that its Forgiveness Platform has been updated and, effective immediately, EIDL Advances will no longer be deducted from forgiveness payments remitted to PPP lenders by the SBA.  

The PPP was created under the Coronavirus Aid, Relief, and Economic Security Act (CARES) Act (P.L. 116-136), which required the SBA, pursuant to section 1110(e)(6), to deduct the amount of any EIDL Advance received by a PPP borrower from the loan forgiveness payment remitted by the SBA to the lender. The SBA began remitting such payments with required EIDL Advance deductions on October 2, 2020.

However, President Trump signed into law on December 27, 2020, the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act (Economic Aid Act), enacted under the Consolidated Appropriations Act, 2021 (P.L. 116-260), which repealed section 1110(e)(6) of the CARES Act.  Accordingly, this change will be applied to SBA forgiveness payments with a status of “Payment Confirmed” dated December 29, 2020, or later, according to the SBA.

“For those loans where SBA remitted a forgiveness payment to a PPP lender that was reduced by an EIDL Advance, SBA will automatically remit a reconciliation payment to the PPP lender for the previously-deducted EIDL Advance amount, plus interest through the remittance date,” the SBA states in the notice. “SBA will identify forgiveness payments that were reduced by EIDL Advances and automatically remit a reconciliation payment to the ACH account identified by the PPP lender in the Forgiveness Platform. Upon confirmation that the payment has been accepted by the PPP lender, SBA will generate a Notice of Paycheck Protection Program Reconciliation Payment that will be available in the Forgiveness Platform.”

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