The Small Business Administration (SBA) has issued an Interim Final Rule controlling how $349 billion in short-term business loans under the CARES Act will be allocated. While the SBA is seeking comments from the public, the rule is effective immediately to provide immediate relief to businesses affected by the COVID-19 emergency. Applications for lenders and borrowers are available now.
The interim rule clarifies—and in some cases contradicts—the text of the CARES Act. But one provision will interest lenders and borrowers alike: payroll protection loans will be made on a “first come, first served” basis until the program’s funds are exhausted. The rule may also allay concerns from lenders skeptical of the government’s promise to guarantee 100 percent of these loans: it says banks that participate in the program as lenders will be held harmless for misrepresentations in the borrower’s application. Other noteworthy rule provisions are summarized below. Continue Reading