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A Better Partnership


Apr 2020
April 01, 2020

Are Loans Under the Paycheck Protection Program Guaranteed by the SBA?

The Paycheck Protection Program (PPP) of the CARES Act (the “Act”) states that the Small Business Administration’s (SBA) participation in PPP loans by the SBA is 100%. The Act clearly states that the SBA is guaranteeing payment of the applicable loan. This 100% guarantee continues to apply after application of any loan forgiveness. The Act states, “the remaining balance shall continue to be guaranteed by the [SBA] under this subsection.”

There have been incorrect or other reports circulating suggesting a different conclusion. These reports were likely based on prior versions of the Act and not the final language of the Act. The analysis based on the prior version of the Act has created some confusion about whether the SBA’s participation on remaining PPP loan balances will continue to be 100% for the life of the loan.   

The U.S. Treasury provided some clarity on this issue. On March 31, 2020, the U.S. Treasury promulgated a fact sheet about the PPP loans. The fact sheet states that the SBA guarantees 100% of the outstanding balance of such loans. The U.S. Treasury has also issued some other high-level summaries of the PPP for lenders and potential borrowers. 

We anticipate more detailed guidance from the SBA and U.S. Treasury later this week.

If you have any questions regarding the SBA’s participation in PPP loans or other finance issues, please contact Ford Turrell, Tim Hillegonds, Charlie Goode or Rodney Martin.

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