By: Scott Borsack
Almost on cue, the SBA released an announcement over the weekend indicating that those loans that have completed the forgiveness process where the Lender recovered the amount of an EIDL grant will be subject to further processing. The SBA is supposed to “automatically remit a reconciliation payment to the PPP lender for the previously-deducted EIDL Advance amount, plus interest through the remittance date” without any action by Lenders. The SBA further provides that
The PPP lender is responsible for notifying the borrower of the reconciliation payment. The PPP lender is also responsible for re-amortizing the loan and notifying the borrower of the amount of the next payment due, or advising the borrower that the loan has been paid in full, whichever is applicable. If the amount remitted by SBA to the PPP lender exceeds the remaining principal balance of the PPP loan (because the borrower made a payment on the loan), the PPP lender must remit the excess amount, including accrued interest paid by the borrower, to the borrower.
So for those of you who lost forgiveness because of an EIDL your lender is supposed to receive the money representing the grant and is to either adjust your loan amortization by reducing the amount of principal you have to repay, or if the loan was forgiven, except for the EIDL grant, refund you the EIDL grant. You might think of contacting your lender and letting them know that you are expecting a refund of your EIDL grant.
This only applies if you have completed the forgiveness process and received a determination of forgiveness reduced by an EIDL grant. For all other borrowers, this pronouncement will be incorporated into the forgiveness process.
Scott Borsack is a partner with Szaferman Lakind and chair of the Business Department. To contact Scott please email him at firstname.lastname@example.org or call 609.275.0400.
Please note that the content of this blog is provided for information and education only. Nothing stated herein is intended to create an attorney client relationship or to constitute legal advice.