Apr 29, 2020

Update on the SBA 10-Day Rule for PPP Loans

The US Small Business Administration (SBA) released a new interim final rule for loans under the Paycheck Protection Program (PPP). The update clarifies some confusion caused by the SBA’s previous guidance regarding the 10-day window for disbursement of funds. 

Under the new interim final rule, lenders have 10 calendar days from April 28 to disburse funds for borrowers who previously had been issued a Preferred Lender Program (PLP) number for their loan. This rule provides assurance for borrowers who have passed or are approaching the 10-day period and worried that their loans may not be funded. However, the disbursement extension comes at the end of the month when many small businesses are struggling to meet May bills, and this extension will add to their financial burdens.

Initial guidance from the SBA stated that lenders had to disburse funds for PPP loans within 10 days of a borrower receiving a PLP number from the SBA. The overwhelming demand for the loans led to the first $350 billion of funds being exhausted within 2 weeks of the application opening. 1.6 million loans were approved during that round, and lenders have been struggling to disburse funds for all the loans within 10 days of a PLP number being issued. 

The new interim rule also provides guidance for the 10-day rule going forward. For new loans, lenders will have 10 calendar days to disburse funds starting from the date a borrower receives a PLP number. The eligible period for potential loan forgiveness begins on the date funds are disbursed—for both past and future PLP number recipients. 

The interim rule included additional guidance for the loans. Going forward, if funds cannot be disbursed due to a delay from the borrower (like missing paperwork), the lender has a total of 20 calendar days to disburse funds. If they still do not have adequate information to fund the loan, the lender may cancel the loan. If loan funds are designated for a refinance of an EIDL, those funds will be deducted from the disbursement amount and paid by the lender to the SBA directly. 

About the author

Mary Kate Miller
Mary Kate Miller
Mary Kate Miller is a writer based in Chicago, IL. She specializes in covering finance (personal and business), investing, and real estate. Her mission in life is to give readers the confidence and the knowledge needed to grow their wealth by making financial topics more accessible. When she's not writing about topics like business loans, you can find her playing armchair financial advisor to the Real Housewives.

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