Paycheck Safety Program Prolonged by way of August 8, 2020 and Recap of June 24, 25 Modifications
The Paycheck Safety Program reopened for functions on July 6, 2020 and can stay open (pending availability of funds) by way of August 8, 2020. As of July 6, 2020 roughly $521 billion in Paycheck Safety Program Loans had been disbursed out of the $659 billion allotted.
The SBA has additionally made information on loans accessible to the general public, disclosing mortgage measurement, enterprise kind and placement, variety of jobs retained, NAICS Code, and sure demographic information for loans beneath $150,000, and disclosing the identical information plus enterprise identify, deal with and vary of mortgage measurement for loans over $150,000.1 The SBA famous within the launch an curiosity in putting a steadiness between the general public’s curiosity in data and the SBA’s curiosity to not hurt companies who took out loans.
New Interim Ultimate Rule on Mortgage Forgiveness and Software Kinds – June 24, 2020
Previous to the re-opening of this system, the SBA launched an Interim Ultimate Rule on June 24, 2020 implementing sure adjustments from the Flexibility Act and updating sure necessities and calculations pursuant to the Paycheck Safety Program mortgage forgiveness software types.
Now Debtors might search forgiveness of PPP loans earlier than the top of the “Lined Interval” (or “Various Lined Interval”2), as long as all proceeds of the PPP mortgage that are eligible for forgiveness have been spent. Nevertheless, if a borrower making use of for forgiveness earlier than the top of the Lined Interval might be topic to a discount within the mortgage quantity because of a discount of salaries or wages in extra of 25% (the “Wage Discount”), the borrower might be required to account for that extra wage discount for the total Lined Interval when making its discount calculation.3 Any portion of the mortgage quantity not forgiven because of a Wage Discount have to be repaid earlier than the maturity date of the mortgage.4
The rule additionally offers examples of documentation that can be utilized to confirm as to if a borrower meets one of many Wage Discount protected harbors:5
The primary protected harbor offers reduction from the Wage Discount the place the borrower can doc, in good religion, that it’s unable to rehire the identical or equally certified people as those who have been workers earlier than February 15, 2020; this protected harbor could also be evidenced by “the written provide to rehire a person, a written file of the provide’s rejection, and a written file of efforts to rent a equally certified particular person.”6 Debtors are additionally required to tell their state’s unemployment insurance coverage workplace of such a rejection inside 30 days of receipt.
The second protected harbor offers reduction from the Wage Discount the place the related reductions in wage have been because of compliance with CDC or OSHA, “requirements for sanitation, social distancing, or some other employee or buyer security requirement associated to COVID-19”, and “should embrace copies of relevant COVID Necessities or Steering for every enterprise location and related borrower monetary information.”7 (emphasis added)
The rule didn’t modify the necessities for a discount of forgiveness primarily based on a discount of full time equal workers.
The Paycheck Safety Program forgiveness functions will be discovered right here:
Kind 3508EZ – For candidates who’re self-employed or unbiased contractors, those that won’t be topic to mortgage forgiveness reductions as a result of there was no discount of wage or full time equal workers, or those that fall beneath a protected harbor from the mortgage forgiveness discount provisions.
Kind 3508 – For all different candidates.
New Incessantly Requested Questions – June 25, 2020
On June 25, 2020, the Division of the Treasury launched up to date Incessantly Requested Questions for the Paycheck Safety Program implementing sure adjustments to this system. These adjustments embrace the next:
Broadening eligibility by limiting the kind of prior legal historical past which might lead to an exclusion from this system;8
Clarifying the start of the Lined Interval because the date of first disbursement when there are a number of disbursements;9
Extending the deadline for lenders to finish their preliminary SBA Kind 1502 for mortgage reporting;10 and
Reflecting the elevated time period of loans from 2 years to five and offering for extension of loans closed earlier than June 5 by mutual settlement.11
For added data on the Paycheck Safety Program, go to the Foley Insights weblog on this system from Could 20th, and its replace on June eighth.
1 Information accessible at: https://www.sba.gov/funding-programs/loans/coronavirus-relief-options/pa…
2 All references to the “Lined Interval” apply equally to candidates using the “Various Lined Interval” provisions of the principles until in any other case specified.
3 Interim Ultimate Rule on Enterprise Mortgage Program Short-term Modifications; Paycheck Safety Program – Sure Eligible Payroll Prices, Doc. No. 2020-14128 § III.1.c., p.9.
4 Id. § III.2, p.8.
5 For data on the protected harbors usually, See SBA Kind 3508 Mortgage Forgiveness Software Directions for Debtors, FTE Discount Protected Harbor, p. 5.
6 Interim Ultimate Rule on Enterprise Mortgage Program Short-term Modifications; Paycheck Safety Program – Sure Eligible Payroll Prices, Doc. No. 2020-14128 § III.1.f., p. 22.
7 Id. § III.1.f., p. 23.
8 Paycheck Safety Program Incessantly Requested Questions (June 25, 2020), Query 12.
9 Paycheck Safety Program Incessantly Requested Questions (June 25, 2020), Query 20.
10 Paycheck Safety Program Incessantly Requested Questions (June 25, 2020), Query 48.
11 Paycheck Safety Program Incessantly Requested Questions (June 25, 2020), Query 49.