PPP Form 1502 Released for Lenders’ Fees & Reporting Requirements
On May 21, 2020, the U.S. Small Business Administration (SBA) released instructions for lenders on filing Form 1502, which is the process for reporting fully disbursed Paycheck Protection Program (PPP) loans and collecting the related processing fee. The SBA began accepting filings on May 22, 2020. Lenders must submit Form 1502 data for all PPP loans by May 29, 2020, or 10 calendar days after the loan is disbursed or canceled, whichever is later.
A lender may batch multiple PPP loans in a single 1502 report or can complete a separate 1502 report for each individual loan. There is no limit on how frequently lenders can submit 1502 reports. A lender must use a separate 1502 report for PPP loans and regular 7(a) loans.
Per the original term sheet, the SBA will pay the following amounts as a lenders’ processing fee:
- 5 percent for loans of not more than $350,000
- 3 percent for loans of more than $350,000 and less than $2 million
- 1 percent for loans of at least $2 million
While lenders must file Form 1502 data for all PPP loans disbursed or canceled, lenders will not be paid a processing fee in the following cases:
- Prior to full loan disbursement
- If the PPP loan is canceled before disbursement
- If the PPP loan is canceled or voluntarily terminated and repaid after disbursement but before the borrower certification safe harbor date of May 18, 2020 (including if a borrower repays the PPP loan because of a misunderstanding or misapplication of the borrower’s certification regarding the necessity of the PPP loan request)
- If the PPP loan is canceled, terminated or repaid after disbursement (and after the borrower certification safe harbor date) because the SBA conducted a loan review and determined the borrower was ineligible for a PPP loan
The lender processing fees may be clawed back within a year after disbursement if the SBA later determines the borrower to be ineligible, although this determination will not affect the SBA guaranty for the loan provided the lender has complied with all other PPP obligations. The SBA may review the payment of the processing fee at forgiveness purchase or any other time and if the SBA determines the fee was paid for an incorrect amount, the lender is responsible for repaying the fee. The processing fee also is subject to clawback if the lender does not satisfy its lender program requirements, including document collection and retention.
Monthly Reporting Requirements
Lenders must provide monthly 1502 reports that include loan status information regardless of whether the borrower made a payment in the current month; all PPP loans are deferred for the first six months. Lenders must continue reporting on a loan until the lender notifies the SBA that the loan has been fully repaid.
After a loan forgiveness purchase, if no loan balance remains, the lender must report the PPP loan as paid in full on the next Form 1502 report. If a loan balance remains after forgiveness, the lender must report the reduction in the loan balance for the forgiveness amount on the next SBA Form 1502 and must service the loan’s remaining balance in accordance with PPP requirements.
BKD will continue to follow this developing situation. As with most topics related to COVID-19, changes are being made rapidly. Please note that this information is current as of the date of publication. Visit BKD’s COVID-19 Resource Center to learn more. If you have questions about these changes, contact your BKD Trusted Advisor™ today.