Lisa R. Godlewski

Lisa R. Godlewski

AGMA

SBA Releases New Guidance re: PPP loans

The Small Business Administration (SBA) updated its guidance in the form of Frequently Asked Questions (FAQs) on the Paycheck Protection Program (PPP) yesterday. FYI: the SBA added FAQs 38 to 42.

POINTS OF INTEREST:

In FAQ #39, the SBA addresses if they will review individual PPP loan files. The answer is yes. In FAQ #31, the SBA reminded all borrowers of an important certification required to obtain a PPP loan. To further ensure PPP loans are limited to eligible borrowers in need, the SBA has decided, in consultation with the Department of the Treasury, that it will review all loans in excess of $2 million, in addition to other loans as appropriate, following the lender’s submission of the borrower’s loan forgiveness application. Additional guidance implementing this procedure will be forthcoming. The review of all loans over $2 million was announced last week. In this FAQ it also states that the outcome of SBA’s review of loan files will not affect SBA’s guarantee of any loan for which the lender complied with the lender obligations set forth in paragraphs III.3.b(i)-(iii) of the Paycheck Protection Program Rule (April 2, 2020) and further explained in FAQ #1.15

We would like to call your attention to FAQ #40: Will a borrower’s PPP loan forgiveness amount (pursuant to section 1106 of the CARES Act and SBA’s implementing rules and guidance) be reduced if the borrower laid off an employee, offered to rehire the same employee, but the employee declined the offer?

The answer is no. As an exercise of the Administrator’s and the Secretary’s authority under Section 1106(d)(6) of the CARES Act to prescribe regulations granting de minimis exemptions from the Act’s limits on loan forgiveness, 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.

The PPP gave out $176 billion of the available $320 billion in loans during the first five days of Round Two. Pennsylvania, New Jersey, and Delaware businesses and nonprofits secured almost 8% of the money, according to data released by the U.S. Department of Treasury and the Small Business Administration on Sunday.

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