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Recent News & Blog

Recent News & Blog / Updates to Paycheck Protection Program FAQs

June 15, 2020

Senate passes PPP liberalization and sends to the President for signature
 

Yesterday, the US Senate passed a bill allowing businesses more time to use Paycheck Protection Program (PPP) funds and still obtain forgiveness. The bill passed the House previously, and now heads to President Donald Trump’s desk for his signature.

The bill extends the eight-week period -- when proceeds must be spent for loans to be forgiven -- to 24 weeks or until the end of the year, whichever comes first. In addition, the bill reduces the amount that MUST be used for payroll from 75% of the loan to 60%; and now includes a forgiveness cliff.  The cliff now mandates that 60% of a loan must be used on payroll otherwise no part of the loan is forgiven.

A full copy of the legislation can be found here.

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May 26, 2020

SBA issues additional PPP loan forgiveness rules
 

The Small Business Administration (SBA) issued additional Paycheck Protection Program (PPP) forgiveness rules on Friday, May 22, expanding on those included in the forgiveness application previously released. Specific clarifications include the following items:

  • Payroll cost eligibility
  • Bonus/hazard pay allowability (but see owner employee bullet below)
  • Owner employee compensation CAP at the LESSER of:
    • 8/52 of 2019 compensation (prior year) OR
    • Current eight-week compensation AND
      • Neither can exceed $15,385
  • Non-payroll costs eligible for forgiveness can include prior period costs if paid within the eight week PPP loan period
  • Non-payroll costs can also include a proration of expenses through the end of the eight week PPP loan period even if paid after the 56th day but before the next regular billing date
  • Expanded descriptions of the reductions to loan forgiveness

A full copy of the document can be found here

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May 14, 2020

Sub-$2 million PPP loan borrowers meet ‘good faith’ certifications


The Small Business Administration (SBA) and Treasury updated the Paycheck Protection Program (PPP) Q&A on 5/13/2020 to include Question #46:

A “blanket deemed good faith need certification” will be assumed for all PPP loans with original principal amounts under $2 Million to “promote economic certainty for borrowers to retain and rehire employees,” noting such companies “are generally less likely to have had access to adequate sources of liquidity in the current economic environment.”

Additionally, loans greater than $2 Million, if determined to lack adequate need (upon SBA review), will have the opportunity to repay the PPP without ANY administrative enforcement of referrals to other agencies.

Finally, applicants that still believe they cannot justify their “economic necessity certification” have until May 18th to repay the funds, without issue.

Read the full text of Q&A #46 here.

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May 5, 2020

PPP safe harbor repayment date extended


The Small Business Administration has updated their Paycheck Protection Program FAQ document to include additional guidance:

43. Question: FAQ #31 reminded borrowers to review carefully the required certification on the Borrower Application Form that “[c]urrent economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant.” SBA guidance and regulations provide that any borrower who applied for a PPP loan prior to April 24, 2020 and repays the loan in full by May 7, 2020 will be deemed by SBA to have made the required certification in good faith. Is it possible for a borrower to obtain an extension of the May 7, 2020 repayment date?

Answer: SBA is extending the repayment date for this safe harbor to May 14, 2020. Borrowers do not need to apply for this extension. This extension will be promptly implemented through a revision to the SBA’s interim final rule providing the safe harbor. SBA intends to provide additional guidance on how it will review the certification prior to May 14, 2020.
 

PPP loan forgiveness guidance for laid off employees offered rehire

40. Question: Will a borrower’s PPP loan forgiveness amount be reduced if the borrower laid off an employee, offered to rehire the same employee, but the employee declined the offer?

Answer: No. The SBA and Treasury intend to issue an interim final rule excluding laid-off employees whom the borrower offered to rehire (for the same salary/wages and same number of hours) from the CARES Act’s loan forgiveness reduction calculation. The interim final rule will specify that, to qualify for this exception, the borrower must have made a good faith, written offer of rehire, and the employee’s rejection of that offer must be documented by the borrower. Employees and employers should be aware that employees who reject offers of re-employment may forfeit eligibility for continued unemployment compensation.

 

RELATED ARTICLES:
 

Paycheck Protection Program - General info and helpful documents

PPP clarification for self-employed forgiveness & general information

So, you received a PPP loan? Now what? - Action steps and downloadable Excel spreadsheet

A notice to our clients regarding PPP loans

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