New guidance this week: 2nd chance for partners to get PPP loans; SBA review threshold clarified; new form for separated employees
In the wake of public criticism about large, publicly traded companies receiving Payroll Protection Program loans, recent federal guidance draws a “bright line” between borrowers who receive less than $2 million and those who receive more.
Additionally, the Small Business Administration (SBA) is offering a second chance for partners who did not initially receive PPP money as part of their loan to receive additional funds.
Finally, the DOL this week issued a new mandatory form for employers to provide to each employee impacted by reduction of work hours or separation.
PPP loans and “good faith”
When applying for a PPP loan, all borrowers had to certify that “current economic uncertainty makes this loan request necessary to support the ongoing operations of the applicant.”
On May 13, the U.S. Treasury and SBA released safe harbor guidance, stating they will consider loans of less than $2 million made in good faith. However, the SBA noted borrowers receiving more than $2 million would be subject to SBA review.
Borrowers the SBA determines should not have received a loan will have to repay the full amount and are not eligible for any forgiveness. The SBA will not pursue administrative enforcement or referral to other agencies if companies repay their loan in full.
PPP borrowing for partnerships
On May 13, the SBA issued an Interim Final Rule that permits borrowers to increase their PPP loan if a partnership did not include any amount for partner compensation in their original PPP application. The interim final rule also permits seasonal employers to increase their PPP loan if they received a PPP loan before the alternative criterion for such employers was posted and would be eligible for a higher maximum loan amount.
If you believe you are eligible for a loan increase as result of this interim final rule, we urge you to contact your accountant and lender as soon as possible.
Note: The maximum PPP loan limit of $10 million for an individual borrower or $20 million for a corporate group still applies. Also, the amount a partner can receive remains up to $100,000, annualized. For more information on calculating what you can receive, go to https://www.cpabr.com/covid_19_news/self-employed-covid-19-stimulus-help-available-now/
There is still a lot we do not know about how the federal government will administer these aide programs and the Boyer & Ritter team is keeping track of the latest information and guidance. Navigating through the PPP process can be complicated, and we are ready to answer your questions and help you maximize loan forgiveness.
DOL issues new mandatory form for separating employees
The Department of Labor and Industry has created a mandatory form for employers to use to satisfy the notification requirement to separated or reduced hours employees regarding the availability of unemployment compensation (UC) at the time of separation in Section 206.1.
Employers must complete the form and provide it to each employee at the time of separation, or when hours are reduced. Mandatory postings about UC do not meet this requirement.
If you have questions regarding related COVID-19 laws and regulations, please refer to the resources available at www.cpabr.com.