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Frequently Asked Questions (FAQs) on the Small Business Administration’s 

Paycheck Protection Program – March 3, 2021

1. [Updated 7/16/2020] What is the Paycheck Protection Program (PPP)?

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) was 

signed into law.1 The CARES Act amends Section 7(a) of the Small Business Act to include a 

new 100 percent guaranteed temporary loan program administered by the Small Business 

Administration (SBA) called the PPP.

The PPP provides low-cost, qualifying forgivable loans to small businesses to help cover payroll 

costs, interest on mortgages, rent, and utilities during this period of economic dislocation caused 

by the COVID-19 pandemic. On April 15, 2020, the SBA published in the Federal Register an 

interim final rule2 (First PPP IFR) regarding the PPP. In order to provide relief expeditiously, the 

First PPP IFR states that the “SBA will allow lenders to rely on certifications of the borrower in 

order to determine eligibility of the borrower and use of loan proceeds and to rely on specified 

documents provided by the borrower to determine qualifying loan amount and eligibility for 

loan forgiveness.”3 The CARES Act authorized the SBA to guarantee $349 billion in loans 

under the program. On April 24, 2020, the Paycheck Protection Program and Health Care 

Enhancement Act was signed into law, authorizing an additional $310 billion for guarantees of 

PPP loans.4

Following the First PPP IFR, the SBA issued a number of interim final rules implementing 

amendments to the PPP. On June 5, 2020, the Paycheck Protection Program Flexibility Act of 

2020 (Flexibility Act) was signed into law, amending the CARES Act. To implement 

amendments to the PPP required by the Flexibility Act, the SBA issued a revised PPP interim

final rule5 (revised PPP IFR) published in the Federal Register on June 16, 2020, which changed 

key PPP provisions. The revised PPP IFR also made conforming amendments to the use of PPP 

loan proceeds for consistency with amendments made in the Flexibility Act. Several of these 

amendments are retroactive to the date of enactment of the CARES Act, as required by section 

3(d) of the Flexibility Act. The SBA’s authority to accept PPP applications from participating 

lenders closed on August 8, 2020 (this authority was extended by Congress6 from an original 

expiration date of June 30, 2020).

The SBA and the U.S. Department of Treasury (Treasury Department) periodically update PPP 

Frequently Asked Questions (FAQs) to provide additional guidance regarding the PPP. For 

more information on the PPP, including a list of the subsequent interim final rules implementing 

the PPP, refer to the SBA website or the Treasury Department website.

2. [Updated 07/16/2020] My bank has never participated in SBA lending programs. Can my 

bank make loans through the PPP program?

In the First PPP IFR, the SBA stated that “All SBA 7(a) lenders are automatically approved to 

make PPP loans on a delegated basis. The Act provides that the authority to make PPP loans can

1 Coronavirus Aid, Relief, and Economic Security Act, Public L. No. 116-136, 134 Stat. 281 (Mar. 27, 2020). 2 85 FR 20811 (Apr. 15, 2020).

3 Id. at 20812. 4 Paycheck Protection Program and Health Care Enhancement Act, Public L. No. 116-139 (Apr. 24, 2020). 5 85 FR 36308 (June 16, 2020). 6 Extension of the authority for commitments for the paycheck protection program, Pub. L. 116-147 (July 4, 2020).
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be extended to additional lenders determined by the Administrator and the Secretary to have the 

necessary qualifications to process, close, disburse, and service loans made with the SBA 

guarantee.” The First PPP IFR provides a list of lenders that have been determined to meet the 

criteria and are eligible to make PPP loans (see 85 FR 20811, 20815, question 3.a.iii). Such lenders will 

need to submit SBA Form 3506 to the SBA’s email box DelegatedAuthority@SBA.gov to 

participate in advancing PPP loans. Financial institutions can find more information about 

becoming a lender on the SBA’s website.

3. What if a financial institution experiences liquidity constraints when using the SBA 

PPP program?

The FDIC understands that financial institutions may have significant near term demand forthis 

SBA product, which could impact liquidity as institutions draw on available or alternative 

funding sources to fund these loans. The FDIC will not criticize financial institutions that 

experience short-term reductions in liquidity or use alternative funding sources to meet demand 

for SBA PPP loans when they are administered in a prudent manner.

4. Will legal lending limits apply to SBA PPP loans?

Generally, the portion of a loan guaranteed by a U.S. government agency is excluded when 

calculating legal lending limits. Reviewing applicable state laws regarding legal lending 

limitations would enable financial institutions to confirm the most accurate method for 

determining legal lending limits.

5. [Updated 7/16/2020] What is the regulatory capital treatment of a covered loan as 

defined under Section 1102 of the Act?

Section 1102 of the CARES Act defines a “covered loan” to mean a loan made under the PPP 

during the “covered period.” The CARES Act originally defined the “covered period” as the 

period beginning on February 15, 2020 and ending on June 30, 2020. However, the Flexibility 

Act amended the definition of “covered period” for a PPP loan to cover “the period beginning on 

February 15, 2020 and ending on December 31, 2020.”

Section 1102 of the CARES Act also provides that a “covered loan” made under the PPP shall 

receive a zero percent risk weight for purposes of calculating a financial institution’s risk-based 

capital requirements. However, the effect of a PPP loan on leverage capital calculations depends 

on whether the loan has been pledged as collateral to the Federal Reserve Board (FRB)’s 

Paycheck Protection Program Liquidity Facility (PPPLF). A PPP loan that has not been pledged 

to the PPPLF must be included in average total consolidated assets and total leverage exposure. 

Refer to Question #6 regarding leverage capital calculations for PPP loans that have been 

pledged to the PPPLF.

6. [Updated 7/16/2020] What are the regulatory capital effects of PPP loans funded 

through the Federal Reserve Board’s PPP Liquidity Facility (PPPLF)?

The PPPLF was approved on April 9, 2020 by the Board of Governors of the FRB to supply 

liquidity to participating institutions through non-recourse, low-cost, term financing secured by 

PPP loans. On April 13, 2020, the FDIC, the FRB, and the Office of the Comptroller of the
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Currency (OCC), issued the PPPLF/PPP Interim Final Rule7 to modify the agencies’ capital rules 

to neutralize the regulatory capital effects of covered loans by financial institutions participating 

in the PPPLF. Under the PPPLF/PPP Interim Final Rule, if an institution pledges PPP loans to 

the PPPLF, then it may exclude those PPP loans from average total consolidated assets and total 

leverage exposure. The regulatory capital relief related to the leverage ratio applies only to 

exposures pledged to the PPPLF. For example, in the case of a $100 PPP loan that is partially 

funded by a $60 PPPLF advance, the institution would only be able to receive capital leverage 

relief on $60, recognizing $40 in its leverage calculation. This treatment is similar to the 

treatment extended previously by the agencies in connection with the FRBs Money Market 

Mutual Fund Liquidity Facility. More information is available at 

https://www.fdic.gov/news/news/press/2020/pr20050a.pdf.

7. [Updated 07/16/2020] Will loans originated under the PPP receive CRACredit?

In most cases, yes. Generally, loans, including PPP loans in amounts of $1 million or less to forprofit businesses, or to nonprofit organizations that are secured by nonfarm, nonresidential real 

estate, are reported and considered as small business loans under the applicable retail lending 

test. PPP loans will be considered particularly responsive if made to small businesses with gross 

revenues of $1 million or less or to businesses located in low- or moderate-income geographies 

or distressed or underserved nonmetropolitan middle-income geographies. Additionally, 

participation in the PPP could receive consideration as innovative or flexible lending practices.

PPP loans to businesses in amounts greater than $1 million may be considered as community 

development loans if they also have a primary purpose of community development as defined 

under the current CRA regulations. Generally, loans to small businesses with gross annual 

revenues of $1 million or less that create or retain jobs for low- or moderate-income individuals 

or in low- or moderate income geographies, or that otherwise meet the economic development 

“size” and “purpose” tests, qualify as community development loans. Such loans may also 

qualify if the loans help revitalize/stabilize low- and moderate-income geographies or distressed 

or underserved nonmetropolitan middle-income geographies.

8. When I use the SBA’s portal, I am prompted to submit an authorization code. What is this 

code?

The SBA has confirmed that the four digit “Authorization Code” is the local SBA District Office 

Code. Here is a list of those authorization codes, which can be found by clicking on the 

embedded hotlink at https://web.sba.gov/pro-net/search/dsp_search-help.cfm?goto=sbaoffice as 

follows:

“Enter the four digit code corresponding to the SBA Office servicing area where you want the 

firm to reside. If you indicate that 8(a), SDB or HUBZone certification is required, the MED area 

will be used instead. This feature is intended primarily for use by SBA Offices and the MED 

program offices, to find small businesses in the areas they service. Entering a code that doesn't 

exist will result in no firms meeting your search criteria. To show/hide the current, existing 

codes, click this hotlink.”

7 Refer also to PPPLF/PPP Interim Final Rule Correction , 85 FR 22009 (Apr. 23, 2020).
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Code SBA District Office Code SBA District Office

0100 BOSTON REGIONAL OFFICE 0610 DALLAS / FT WORTH DISTRICT OFFICE

0101 MASSACHUSETTS DISTRICT OFFICE 0637 CORPUS CHRISTI BRANCH OFFICE

0130 SPRINGFIELD BRANCH OFFICE 0639 LOWER RIO GRANDE VALLEY DISTRICT OFFICE

0150 VERMONT DISTRICT OFFICE 0669 ARKANSAS DISTRICT OFFICE

0156 CONNECTICUT DISTRICT OFFICE 0671 HOUSTON DISTRICT OFFICE

0165 RHODE ISLAND DISTRICT OFFICE 0677 EL PASO DISTRICT OFFICE

0172 MAINE DISTRICT OFFICE 0678 LUBBOCK DISTRICT OFFICE

0189 NEW HAMPSHIRE DISTRICT OFFICE 0679 LOUISIANA DISTRICT OFFICE

0200 NEW YORK REGIONAL OFFICE 0680 OKLAHOMA DISTRICT OFFICE

0202 NEW YORK DISTRICT OFFICE 0681 SAN ANTONIO DISTRICT OFFICE

0206 ELMIRA BRANCH OFFICE 0682 NEW MEXICO DISTRICT OFFICE

0219 ROCHESTER BRANCH OFFICE 0700 KANSAS CITY REGIONAL OFFICE

0235 MELVILLE BRANCH OFFICE 0709 KANSAS CITY DISTRICT OFFICE

0248 SYRACUSE DISTRICT OFFICE 0721 SPRINGFIELD BRANCH OFFICE

0252 PUERTO RICO/USVI DIST OFFICE 0736 CEDAR RAPIDS BRANCH OFFICE

0296 BUFFALO DISTRICT OFFICE 0761 DES MOINES DISTRICT OFFICE

0299 NEW JERSEY DISTRICT OFFICE 0766 NEBRASKA DISTRICT OFFICE

0300 PHILADELPHIA REGIONAL OFFICE 0767 WICHITA DISTRICT OFFICE

0303 PHILADELPHIA DISTRICT OFFICE 0768 ST. LOUIS DISTRICT OFFICE

0304 RICHMOND DISTRICT OFFICE 0800 DENVER REGIONAL OFFICE

0316 HARRISBURG BRANCH OFFICE 0811 COLORADO DISTRICT OFFICE

0318 WILKES BARRE BRANCH OFFICE 0875 NORTH DAKOTA DISTRICT OFFICE

0325 CHARLESTON BRANCH OFFICE 0876 SOUTH DAKOTA DISTRICT OFFICE

0341 DELAWARE DISTRICT OFFICE 0883 UTAH DISTRICT OFFICE

0353 WASHINGTON DISTRICT OFFICE 0885 MONTANA DISTRICT OFFICE

0358 PITTSBURGH DISTRICT OFFICE 0897 WYOMING DISTRICT OFFICE

0373 BALTIMORE DISTRICT OFFICE 0900 SAN FRANCISCO REGIONAL OFFICE

0390 WEST VIRGINIA DISTRICT OFFICE 0912 SAN FRANCISCO DISTRICT OFFICE

0400 ATLANTA REGIONAL OFFICE 0914 LOS ANGELES DISTRICT OFFICE

0405 GEORGIA DISTRICT OFFICE 0920 SANTA ANA DISTRICT OFFICE

0438 GULFPORT 0931 SACRAMENTO DISTRICT OFFICE

0455 SOUTH FLORIDA DISTRICT OFFICE 0942 FRESNO DISTRICT OFFICE

0457 KENTUCKY DISTRICT OFFICE 0944 NEVADA DISTRICT OFFICE

0459 ALABAMA DISTRICT OFFICE 0951 HAWAII DISTRICT OFFICE

0460 NORTH CAROLINA DISTRICT OFFICE 0954 SAN DIEGO DISTRICT OFFICE

0464 SOUTH CAROLINA DISTRICT OFFICE 0988 ARIZONA DISTRICT OFFICE

0470 MISSISSIPPI DISTRICT OFFICE 0995 GUAM BRANCH OFFICE

0474 TENNESSEE DISTRICT OFFICE 1000 SEATTLE REGIONAL OFFICE

0491 NORTH FLORIDA DISTRICT OFFICE 1013 SEATTLE DISTRICT OFFICE

0500 CHICAGO REGIONAL OFFICE 1084 ALASKA DISTRICT OFFICE

0507 ILLINOIS DISTRICT OFFICE 1086 PORTLAND DISTRICT OFFICE

0508 MINNESOTA DISTRICT OFFICE 1087 BOISE DISTRICT OFFICE

0515 MICHIGAN DISTRICT OFFICE 1094 SPOKANE BRANCH OFFICE

0517 SPRINGFIELD BRANCH OFFICE 5466 FIELD INFO TECHNOLOGY SPECIALISTS

0545 CINCINNATI BRANCH OFFICE 5770 GRANTS MANAGEMENT BRANCH

0547 MARQUETTE BRANCH OFFICE 5771 CONTRACTS BRANCH

0549 CLEVELAND DISTRICT OFFICE 5880 CENTRALIZED TRAINING

0562 INDIANA DISTRICT OFFICE 5881 BENEFITS, PAYROLL / PERSONNEL SYSTEMS

0563 WISCONSIN DISTRICT OFFICE 5990 ADMINISTRATIVE INFORMATION BRANCH

0593 COLUMBUS DISTRICT OFFICE 5991 FACILITIES MANAGEMENT BRANCH

0600 DALLAS REGIONAL OFFICE
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9. Are small businesses owned by directors and equity shareholders of PPPapproved lenders eligible to receive a PPP loan?

Yes, according to the SBA, small businesses owned by directors and shareholders with less than 

a 30 percent interest in a PPP-approved lender can obtain PPP loans from the PPP lender with 

which they are associated, as long as the director or shareholder is not an officer or key 

employee of the PPP lender. The SBA indicates that such PPP loans must follow the same 

process as any similarly situated customer or account holder of the PPP lender. Such PPP loans 

must not receive any favorable treatment by the PPP lender with which they are associated, 

including processing time or prioritization of their application.

The SBA goes on to note that small businesses owned by directors and shareholders with less 

than a 30 percent interest in a PPP lender who are an officer or key employee of the PPP lender 

are also eligible to receive a PPP loan, but such loans must be obtained from a PPP lender with 

which they are not associated. The SBA issued a second interim final rule (Second PPP IFR) 

that supplements the First PPP IFR, which addresses eligibility issues for certain business 

concerns for PPP loans. The Second PPP IFR states:

“The Administrator also recognizes that many directors and equity holders of PPP Lenders are 

owners of unrelated businesses. For those reasons, the Administrator, in consultation with the 

Secretary, has determined that SBA regulations (including 13 CFR 120.110 and 120.140) shall 

not apply to prohibit an otherwise eligible business owned (in whole or part) by an outside 

director or holder of a less than 30 percent equity interest in a PPP Lender from obtaining a 

PPP loan from the PPP Lender on whose board the director serves or in which the equity owner 

holds an interest, provided that the eligible business owned by the director or equity holder 

follows the same process as any similarly situated customer or account holder of the Lender.

Favoritism by the Lender in processing time or prioritization of the director’s or equity holder’s 

PPP application is prohibited.

The foregoing paragraph does not apply to a director or owner who is also an officer or key 

employee of the PPP Lender. Officers and key employees of a PPP Lender may obtain a PPP 

Loan from a different lender, but not from the PPP Lender with which they are associated.”

In issuing the Second PPP IFR, the SBA also reminded lenders that they still must comply with 

all other applicable federal and state laws and regulations governing extensions of credit and 

lending limits, including Regulation O (Extensions of Credit to Officers, Directors and Principal 

Shareholders).8

10. [Updated 7/16/2020] Has the FDIC modified its treatment of PPP loans under the 

deposit insurance assessment rules?

Yes. On June 22, 2020, the FDIC Board adopted a final rule that mitigates the deposit 

insurance assessment effects of participating in the program and the PPPLF and Money Market 

Mutual Fund Liquidity Facility. The FDIC will apply the changes under the final rule to an

8 On April 22, 2020, the Board of Governors of the Federal Reserve System issued an interim final rule that excepts certain 

loans that are guaranteed under the SBA’s PPP from the requirements of section 22(h) of the Federal Reserve Act and the 

corresponding provisions Regulation O. See https://www.govinfo.gov/content/pkg/FR-2020-04- 22/pdf/2020-08574.pdf.
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institution’s assessments starting in the second quarter of 2020. The final rule is available at 

https://www.fdic.gov/news/financial-institution-letters/2020/fil20063.html

11. Has any portion of the second appropriation for the PPP been set aside for smaller 

lenders?

Yes. Of the commitments authorized on April 24, 2020 by the Paycheck Protection Program and 

Health Care Enhancement Act, $60 billion of the funding was specifically set aside for smaller 

lending institutions.

12. Are PPP loans for existing customers considered new accounts for FinCEN CDD Rule 

purposes? Are lenders required to collect, certify, or verify beneficial ownership 

information in accordance with the rule requirements for existing customers?

The Treasury Department has provided a response to this question at account opening as 

follows “If the PPP loan is being made to an existing customer and the necessary information 

was previously verified, you do not need to re-verify the information. Furthermore, if federally 

insured depository institutions and federally insured credit unions eligible to participate in the 

PPP program have not yet collected beneficial ownership information on existing customers, 

such institutions do not need to collect and verify beneficial ownership information for those 

customers applying for new PPP loans, unless otherwise indicated by the lender’s risk-based 

approach to BSA compliance.” Please refer to the Treasury Department’s PPP FAQs (Question 

#18) at Treasury PPP FAQs .

13. [Updated 05/29/2020] Can PPP loans be forgiven?

Yes. The CARES Act permits PPP loans to small businesses to be forgiven if the funds were 

used for certain eligible expenses. The SBA and the Treasury Department issued an interim 

final rule in order to help PPP borrowers prepare and submit loan forgiveness applications as 

provided for in the CARES Act, help PPP lenders who will be making the loan forgiveness 

decisions, and inform borrowers and lenders of SBA’s process for reviewing PPP loan 

applications and loan forgiveness applications. More information is available on the SBA’s 

website at https://www.sba.gov/document/support--ppp-interim-final-rule-requirements-loanforgiveness.

14. [Updated 07/14/2020] Adverse Action Notices. How do the Equal Credit Opportunity Act 

(ECOA) and Regulations B provisions requiring creditors to notify an applicant of action 

taken on a “completed application” apply to PPP loan applications received by the 

creditor?

The CFPB has issued FAQs that clarify certain responsibilities of creditors under the ECOA and 

Regulation B with respect to SBA PPP loan applications. The CFPB’s FAQs are available on its 

website at https://www.consumerfinance.gov/policy-compliance/guidance/other-applicablerequirements/equal-credit-opportunity-act/.
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The following FAQ’s related to the PPP can also be found in the FDIC’s General FAQs for Financial

Institutions Affected by the COVID-19.

15. BSA Issues for New Customers. What are a financial institution’s BSA requirements when 

a financial institution is approached by a non-customer (potential new customer 

relationship) regarding the PPP?

The Treasury Department has provided a response to this question. For new customers, the lender’s 

collection of the following information from all natural persons with a 20% or greater ownership stake 

in the applicant business will be deemed to satisfy applicable BSA requirements and FinCEN 

regulations governing the collection of beneficial ownership information: owner name, title, 

ownership %, TIN, address, and date of birth. If any ownership interest of 20% or greater in the 

applicant business belongs to a business or other legal entity, lenders will need to collect appropriate 

beneficial ownership information for that entity. Please refer to the Treasury Department’s PPP FAQs 

(Questions #25 and 26) at Treasury PPP FAQs.

If you have additional questions about requirements related to beneficial ownership, refer to 

https://www.fincen.gov/resources/statutes-and-regulations/cdd-final-rule. Decisions regarding further 

verification of beneficial ownership information collected from new customers should be made 

pursuant to the lender’s risk-based approach to BSA compliance.

16. CRA PPP Reporting. For PPP loans reported as small business loans (Type 01), with loan 

amounts of $1 million or less, made to an existing bank customer, should a bank report 

revenue on the CRA loan register based on what it had previously gathered about that 

business? For a new PPP borrower, which has an unknown revenue, may banks use a 

revenue estimate and report it as having gross annual revenues of “1” (gross annual revenues 

of $1 million or less) or must they use a CRA revenue code of “3” (unknown/not used in credit 

decision).

Generally, a bank should rely on and report the gross annual revenues that it considered in making its 

credit decision. Loans for which the bank did not collect revenue information may not be included when 

evaluating a bank’s performance in lending to businesses and farms with gross annual revenues of $1 

million or less unless the small business or small farm provides supplemental information or the bank has 

another source demonstrating the borrower’s revenue, such as information on existing customers. Banks 

that have access to an applicant’s gross annual revenue information may, but are not required to, report 

that information. When evaluating CRA performance, the FRB, the OCC, and the FDIC (agencies) will 

take into account the unique circumstances affecting borrowers and banks resulting from the COVID-19 

emergency and will not penalize a bank for making a large volume of loans for which gross annual 

revenue information is not available. The agencies will also take into account a bank’s good faith efforts 

demonstrably designed to support low- and moderate-income individuals and small businesses and small 

farms and its efforts to comply with applicable consumer protection laws.

17. PPP CRA Consideration. How will PPP loans be considered when evaluating the borrower 

and geographic distribution of loans and the distribution of loans inside and outside of bank 

assessment areas?

PPP loans in amounts of $1 million or less will be considered when evaluating a bank’s performance 

under the applicable retail lending test. This includes the evaluation of performance based on the 

distribution of loans inside and outside of its assessment areas, by business size based on gross annual
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revenues, and across geographies of different income levels. The agencies understand that this current 

environment presents unique challenges. Therefore, although performance may appear to be negatively 

affected, for example by a high level of out-of-assessment area lending, examiners will consider the 

information in context and evaluate it accordingly. That said, banks should continue to seek to meet the 

credit needs of their communities if making a significant amount of loans outside of their assessment 

areas.

Additionally, an examiner’s review of the borrower distribution of retail lending is typically focused on 

activities within a bank’s assessment area(s). However, as noted in Q&A 345.22(b)(2) & (3)—49 a bank 

may receive consideration for retail loans to low- or moderate-income individuals, small businesses, or 

small farms outside of their assessment area(s), provided that they have adequately addressed the needs 

of borrowers within their assessment area(s).

18. [03/03/2021] PPP CRA Considerations Community Development. Are PPP loans in amounts 

greater than $1 million that are also in low- or moderate-income geographies or in 

distressed or underserved nonmetropolitan middle-income geographies automatically 

considered to be community development activities?

Yes, a PPP loan in amounts greater than $1 million in one of these geographies will be considered an 

eligible community development activity. Pursuant to the Interagency Questions and Answers Regarding 

Community Reinvestment, 10 activities that revitalize or stabilize a low- or moderate- income geography 

or a distressed or underserved nonmetropolitan middle-income geography help to attract new, or retain 

existing, jobs, businesses, or residents. The PPP was enacted and signed into law in order to support 

smaller businesses and retain jobs.

19. [03/03/2021] CRA PPP Reporting. Should banks report, and should examiners giveCRA 

consideration to, PPP loans that have been rescinded or returned under the SBA’s safe 

harbor?

No. Banks should neither report these loans on their CRA loan register nor will examiners consider the 

loans in their CRA evaluations of banks during the applicable time period, as these loans ultimately had 

no impact on the relevant business, its employees, or its community.

20. [03/03/2021] PPP CRA Services. Can banks receive CRA service test consideration for 

processing Paycheck Protection Program (PPP) or other pandemic-focused loan 

applications and related servicing activity?

The CRA regulatory criteria for the service test do not include loan processing and servicing activities 

for retail loans originated by a bank.11 Additionally, the agencies generally consider building new 

lending platforms and technical assistance provided to borrowers during a loan application process to be 

activities that banks engage in during the normal course of doing business. Therefore, the agencies will 

not extend CRA service test consideration for PPP-related activities.

 9 See Interagency Questions and Answers Regarding Community Reinvestment, 81 FR 48506 (July 25, 2016). 10 See https://www.ffiec.gov/cra/qnadoc.htm. 11 The retail service test criteria include the current distribution of branches, the bank’s record of opening and closing branches, the 

availability and effectiveness of alternate systems for delivering retail banking services, and the range of services provided. See 12 CFR

.24(d) for details.
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The agencies do recognize the Paycheck Protection loan program is responsive to community credit 

needs. Therefore, these activities will be considered under the CRA lending test when evaluating flexible 

or innovative lending programs offered by the bank.

21. [03/03/2021] PPP CRA Services. Due to the economic distress caused by the COVID-19 

pandemic, some banks have been: (a) waiving withdrawal penalties on certificates of 

deposit (CDs); (b) fulfilling early distribution requests regarding individual retirement 

accounts (IRAs); (c) allowing draws on home equity lines of credit (HELOCs) during the 

repayment periods; (d) increasing transaction limits; (e) eliminating overdraft fees; and (f) 

eliminating ATM fees. Will CRA community development service credit be given for these 

types of actions during the pandemic? How should banks document these activities and the 

number of customers served by them?

The Joint Statement on CRA Consideration for Activities in Response to COVID-19 (Joint Statement) on 

March 19, 2020, explains that the agencies will provide favorable CRA consideration to retail banking 

services and retail lending activities in a bank’s assessment area(s) that are responsive to the needs of 

low- and moderate-income individuals, small businesses, and small farms affected by the pandemic and 

that are consistent with safe and sound banking practices. The Community Reinvestment Act (CRA) 

Consideration for Activities in Response to the Coronavirus Frequently Asked Questions (FAQs) include 

additional examples of such activities.

The waiving of ATM fees, overdraft fees, and early withdrawal penalties on CDs are examples of retail 

services considered responsive to the needs of low- and moderate-income individuals as explained in the 

Joint Statement. The waiving of a bank’s withdrawal fees on savings accounts is not included in the 

Joint Statement or other of these FAQs, but is another example of a responsive service. Allowing a lowor moderate-income individual to make draws from a HELOC during the repayment period could 

constitute a flexible lending practice. On the other hand, allowing a low- or moderate-income individual 

to make a withdrawal from an IRA, as allowed under the CARES Act,12 or to draw on a HELOC during 

the draw period are routine banking services and, as such, are not eligible for CRA consideration.

Examiners will consider any relevant information a bank provides that demonstrates a service is 

responsive or tailored to the convenience and needs of its assessment area(s), particularly the 

convenience and needs of low- or moderate-income individuals.

22. [03/03/2021] PPP CRA Services. Considering the challenge of providing in-person

community development services during the COVID-19 pandemic, how will such services 

provided virtually by bank representatives be considered for CRA purposes?

Historically, for CRA purposes, bank representatives have primarily provided community 

development services in-person. However, the agencies recognize that the COVID-19 pandemic has 

limited banks’ ability to continue doing so. As an alternative to in-person services, the agencies will 

consider services provided virtually (e.g., Zoom, Microsoft Teams, WebEx, etc.) by bank 

representatives that have a primary purpose of community development and that are related to the 

provision of financial services. Examples of community development services provided virtually 

could include, but are not limited to, financial literacy programs or first-time homebuyer education 

sessions targeted to low- and moderate-income individuals and small business or small farm technical 

assistance sessions.

 12 See Coronavirus Aid, Relief, and Economic Security Act (CARES Act), https://www.congress.gov/116/bills/hr748/BILLS116hr748enr.pdf.
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Community development services provided virtually are qualified individually, by each event 

conducted and in consideration of the assessment area(s) benefitted. Therefore, if a bank 

representative conducts a financial counseling session to help people affected by COVID-19 virtually 

for primarily low- and moderate-income individuals in a single assessment area, the bank will receive 

credit for one community development service for the assessment area. Of note, a community 

development service provided virtually that reaches multiple assessment areas should be considered 

at either the state or institution level. For example, if a bank representative conducts a small business 

technical assistance session that is virtually attended by businesses nationwide, the community 

development service will be considered at the institution level.
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Accounting and Regulatory Reporting Frequently Asked Questions on the 

Small Business Administration (SBA) Paycheck Protection Program (PPP) 

August 14, 2020

1. How should institutions account for loans originated within the PPP?

For regulatory reporting purposes, a loan is generally an extension of credit resulting from direct 

negotiations between a lender and a borrower. Accordingly, institutions should account and 

report loans made within the SBA’s PPP as loans in Schedule RC-C, Loans and Lease Financing 

Receivables.

2. [Updated 08/14/2020] Where should institutions report PPP loans in the Call Report?

All loans should be categorized in Schedule RC-C, part I, according to security, borrower, or purpose. To 

the extent that no collateral is required as part of the program, institutions should report loans in the proper 

categories in Schedule RC-C, part I, according to purpose and borrower. For loan categories in Schedule 

RC-C, part I, that include certain loans to individuals, the term “individual” may include a trust or other 

entity that acts on behalf of (or in the place of) an individual or a group of individuals for purposes of 

obtaining the loan. Loans covering two of more categories are sometimes difficult to categorize. In such 

instances, institutions should categorize the entire loan according to the major criterion. Beginning with 

the June 30, 2020 Call Report, financial institutions separately report in Schedule RC-M, items 17.a., 

17.b., 17.c., and 17.e, the number of PPP covered loans outstanding, the quarter-end outstanding balance 

of PPP covered loans, the quarter-end outstanding balance of PPP covered loans that are pledged to the 

Federal Reserve Board’s PPP Liquidity Facility (PPPLF), and the quarterly average amount of PPP 

covered loans pledged to the PPPLF that were excluded from total assets for the leverage ratio reported in 

Schedule RC-R, Part I, item 30, respectively. Refer to the June 2020 COVID-19 Related Supplemental 

Instructions to the Call Report for more information.

3. [Updated 08/14/2020)]How should institutions account and report for regulatory 

reporting purposes fees received in connection with a PPP loan?

Institutions are reminded that for recognition and measurement purposes, the regulatory 

reporting requirements applicable to the Call Report should conform to U.S. GAAP. 

Accordingly, the accounting and reporting for fees received in connection with a PPP loan will 

depend on the institution’s intent and accounting for the loan.

Institutions that account for the loan as a loan held for investment should account and report the 

fees received as a loan origination fee in accordance with ASC Subtopic 310-20, Receivables –

Nonrefundable Fees and Other Costs. As a result, the fee received should be deferred and 

recognized over the life of the related loan, or the estimated life of the related loans if the criteria 

in ASC Section 310-20-35 is met, as an adjustment of yield (interest income). On June 30, 2020, 

the American Institute of Certified Public Accountants and its Depository Institutions Expert 

Panel released a Technical Questions and Answers that discussed the accounting for the fee 

received or receivable from the SBA for originating the loan.

13

 13See https://www.aicpa.org/content/dam/aicpa/interestareas/frc/downloadabledocuments/tqa-sections/tqa-section-2130-42-44.pdf.
1

To the extent an institution originates a PPP loan with the intent to sell and accounts for the loan 

at the lower of cost or fair value, fees received should be deferred until the loan is sold, rather

than recognized as an adjustment of yield.

4. [Updated 8/14/2020] Should the guarantee provided be considered in an institution’s 

allowance for loan and lease losses or allowance for credit losses methodology?

For institutions that have not adopted ASU 2016-13, the guarantee should be considered in 

determining the allowance for loan and leases in accordance with ASC Topic 450. For 

institutions that have adopted ASU 2016-13, ASC Section 326-20-30 describes that the estimate 

of expected credit losses should reflect how credit enhancements mitigate expected credit losses 

on financial assets. Accordingly, the guarantee should be considered in estimating credit losses 

on the originated loan. On June 30, 2020, the American Institute of Certified Public 

Accountants and its Depository Institutions Expert Panel released a Technical Questions and 

Answers that discussed the SBA guarantee and its interaction in estimating credit losses on the 

associated loan.14

5. [Updated 8/14/2020] How should institutions account for PPP loan forgiveness when 

notification of forgiveness is provided or a portion of the loan is transferred to the 

SBA?

For regulatory reporting purposes, PPP loans should continue to be accounted for as loan receivables 

recognizing payments from the borrower or the SBA. Payments received from the borrower or the SBA 

prior to the maturity of the loan, other than required payments of principal and interest, are considered

prepayments of the loan. Based on the premise that the SBA is considered one of the counterparties, or 

co-borrower, to the loan agreement in a PPP loan, if the borrower provides the institution and SBA with 

documentation supporting that it has met the condition of forgiveness, payments received from the SBA

should be accounted and reported similar to payments received from the borrower. Accordingly, payments 

received prior to the loan’s maturity from the borrower or the SBA, either full or partial, should be 

accounted and reported as a prepayment. Unamortized loan origination fees should be accounted for in 

accordance with ASC Subtopic 310-20, Receivables – Nonrefundable Fees and Other Costs.

6. Should institutions consider PPP loans to be loans originated below market interest rates?

For regulatory reporting purposes, an institution should refer to ASC Subtopic 835-30, Interest –

Imputation of Interest, which excludes transactions where interest rates are affected by the tax 

attributed or legal restrictions prescribed by a governmental agency. Accordingly, institutions 

do not need to impute interest on a PPP loan at a market rate.

 14 See https://www.aicpa.org/content/dam/aicpa/interestareas/frc/downloadabledocuments/tqa-sections/tqa-section-2130-42-44.pdf.