COVID-19 Funding Update
Last night, the SBA issued a new interim final rule which allows lenders to increase existing PPP loans to partnerships and seasonal employers. In separate guidance, the SBA extended the safe harbor for returning PPP loans from May 14th to May 18th.
According to a Journal of Accountancy article, “The new interim final rule relating to partnerships addresses situations where some completed their loan applications before guidance was released April 14. The April 14 interim rule prohibited partners in partnerships from submitting a separate PPP loan application for themselves as self-employed individuals. Instead, the self-employment income of general active partners was to be reported as a payroll cost, up to $100,000 annualized, on a PPP loan application filed by, or on behalf of, the partnership”.
The article goes on to say “That ruling meant that partnerships, including accounting firms, that had already submitted PPP applications without including partner self-employment income likely did not receive the maximum amount of PPP loans for which they were eligible. Similarly, an interim final rule dated April 28 established an alternative criterion for calculating the maximum loan amount for PPP loans issued to seasonal employers.”
In addition, they noted that, “The interim final rule issued Wednesday allows all PPP lenders to increase existing PPP loans to partnerships or seasonal employers to include appropriate amounts to cover partner compensation in accordance with the April 14 interim final rule, or to permit the seasonal employer to calculate its maximum loan amount using the alternative criterion posted on April 28.”
With regard to the safe harbor extension, the deadline to return PPP funds is now May 18. This information is located on page 16-17 of the SBA’s FAQ document. The previous safe harbor deadline was May 14. The safe harbor gives borrowers which received PPP loans to return them if they are not able to make a good-faith certification of the necessity of their loan requests.
For answers to other PPP questions, view the SBA’s FAQ document.
It can be difficult to make sense of all the new legislation passed in the wake of COVID-19. Contact us to help you navigate through this pandemic and check out our COVID-19 Resources page for more information.