Can I amend my PPP loan to request additional proceeds?
July 15, 2020
The SBA has recently addressed the question of whether one can amend their PPP loan to request additional proceeds and under what circumstances.
Question: We have heard mixed messages about whether I can amend my PPP loan for additional proceeds? Can you help me better understand this issue.
Answer: The SBA changed the rule on including compensation for owners/partners as well as for seasonal employers so that loan increases would be permitted for borrowers who met the eligibility criteria outlined below (subject to certain limitations). These are the only situations that we’ve seen where the SBA has ruled that loan increases are permitted.
Within 20 calendar days of the PPP loan being disbursed, lenders must submit a Form 1502 (which allows them to collect payment from the SBA for the loan funds) must be submitted monthly thereafter. Note that borrowers cannot increase the loan amount through these subsequent Form submissions even where the increase relates to the updates we’ve highlighted below for owner/partner compensation or seasonal employers. What follows is the text from the SBA’s Interim Final Rule on Loan Increases (emphasis added):
Q: If a partnership received a PPP loan that did not include any compensation for its partners, can the loan amount be increased to include partner compensation?
A: Yes. If a partnership received a PPP loan that only included amounts necessary for payroll costs of the partnership’s employees and other eligible operating expenses, but did not include any amount for partner compensation, the lender may electronically submit a request through SBA’s E-Tran Servicing site to increase the PPP loan amount to include appropriate partner compensation, even if the loan has been fully disbursed, provided that the lender’s first SBA Form 1502 report to SBA on the PPP loan has not been submitted. After the initial SBA Form 1502 report on the PPP loan has been submitted to SBA, or after the date the first SBA Form 1502 was required to be submitted to SBA, the loan cannot be increased.
Q: If a seasonal employer received a PPP loan before the alternative criterion for determining the maximum loan amount for seasonal employers became available, can the loan amount be increased based on a revised calculation using the alternative criterion?
A: Yes. If a seasonal employer received a PPP loan before the alternative criterion for such employers was posted on April 28, 2020, and would be eligible for a higher maximum loan amount under the alternative criterion, the lender may electronically submit a request through SBA’s E-Tran Servicing site to increase the PPP loan amount. In no event can the increased loan amount exceed the maximum loan amount allowed under the PPP Program, which is $10 million for an individual borrower or $20 million for a corporate group. Additionally, the borrower must provide the lender with the required documentation to support the calculation of the increase.
Hopefully, this answers your question.