2. Application for Guaranty. This Agreement governs only “covered loans,” duly approved
under delegated authority hereafter for guaranty by SBA, that are subject to the Paycheck
Protection Program under the CARES Act and the Economic Aid Act, sections 7(a)(36),
7(a)(37), and 7A of the Small Business Act, any rules or guidance that has been issued by SBA
implementing the Paycheck Protection Program, or any other applicable Loan Program
Requirements, as defined in 13 CFR § 120.10, as amended from time to time (collectively “PPP
Loan Program Requirements”).
3. Approval of Guaranty. Lender will process and approve covered loans under delegated
authority from SBA. Lender assumes all obligations, responsibilities, and requirements
associated with delegated processing of covered loans made under the Paycheck Protection
Program. Any change in the terms or conditions stated in the loan authorization shall be made in
accordance with PPP Loan Program Requirements. For purposes of making covered loans to an
eligible recipient under the Paycheck Protection Program, Lender is responsible, to the extent set
forth in the PPP Loan Program Requirements, for all decisions concerning the eligibility
(including size) of a borrower for a covered loan. Lender may issue a covered loan approved
under PPP procedures without prior SBA review and approval of the processing and
underwriting of the loan by executing a PPP Authorization.
4. Closing and Disbursement of Covered Loans. Lender must close and disburse each covered
loan in accordance with the terms and conditions of the PPP Authorization and PPP Loan
Program Requirements. Lender must ensure that a note and all other Loan Documents (as
defined in this paragraph) and additional documents are properly executed and take such other
actions necessary to fulfill the requirements of the Paycheck Protection Program. SBA is
entitled, at any time, to examine and obtain copies of all notes, certifications and documentation
(herein, collectively, called “Loan Documents”), and all other records held by Lender which
relate to covered loans made pursuant to the Paycheck Protection Program.
5. Administration of Covered Loans. Lender will hold the Loan Documents and receive all
payments of principal and interest unless Lender is required to transfer or assign the note to SBA
or a third party at SBA’s direction. Lender must service and liquidate all covered loans made
under the Paycheck Protection Program in accordance with PPP Loan Program Requirements.
Except when SBA directs otherwise, all servicing actions will be the responsibility of Lender,
which must follow accepted standards of loan servicing employed by prudent lenders.
6. Purchase by SBA. By making any written demand that SBA purchase the guaranteed portion
of a loan, Lender will be deemed thereby to certify that the covered loan has been made, closed,
serviced, and liquidated in compliance with the Paycheck Protection Program and PPP Loan
Program Requirements. This Agreement will remain in full force and effect with respect to the
covered loan after any purchase.
7. Prohibited Fees. Other than a fixed interest rate of 1.0%, calculated on a non-compounding,
non-adjustable basis, on the covered loan, Lender is not permitted to charge or receive any
bonus, fee, prepayment penalty, commission or other payment or benefit from a borrower in
connection with the making or servicing of any covered loan under the Paycheck Protection
SBA Form 3506 (04/2021)