Government Updates and SBA Loan Details

GOVERNMENT UPDATES / SBA CORONAVIRUS RELIEF BUSINESS LOAN - APPLICATION AND INFORMATION

July 8, 2020: PPP Program Extended, Still Accepting Loan Applications
The Paycheck Protection Program resumed accepting applications July 6, 2020, at 9:00 AM EDT in response to President signing the program's extension legislation. The new deadline for SBA to approve a PPP loan is August 8, 2020.  You should consult with your local lender as to whether it is participating in the program. As of June 30, the $131.9 billion still remained in the PPP account. View a list of lenders participating in the Paycheck Protection Program by state. The extension allows lawmakers on Capitol Hill additional time to negotiate next steps in how to support businesses who continue to struggle under COVID-19. 

June 19, 2020: The Franklin Partnership has shared an update on the SBA PPP Forgiveness 3508 Application, including details, relevant forms and deadlines. Of note - businesses are reminded that the SBA may NOT approve any loans after June 30, 2020, therefore, if a company has yet to apply for a PPP loan but intends to do so, it is recommended that all companies fill out the loan application with their lender no later than June 23. 

To read the full update from The Franklin Partnership, click here.

June 4, 2020: The Senate has passed the previously approved House version of the Paycheck Protection Flexibility Act. To read this memo from Benesch (shared on June 4, 2020), click here. To see additional details shared by the team at Mueller Prost, click here

The SBA has added financial relief for qualifying businesses under their disaster relief program. There are many unknowns, but below are several documents and links that provide additional detail.

PPP Loan Forgiveness Application Form Released

A message from The Franklin Partnership

On May 15, 2020, the Small Business Administration (SBA) released the Paycheck Protection Program (PPP) loan forgiveness application form.

While it provides quite a bit more clarity for borrowers, many questions remain that Treasury and SBA will hopefully clarify in a pending Interim Final Rule and further guidance. More information is needed on the safe harbor for employers who had employees not return who were offered employment; how strict they will be on large bonuses that go towards payroll thresholds; on utilities what defines transportation and are cell phones included; and a few other questions.

Most significant is they kept the 75% on payroll costs but allow the 8 weeks to align with a payroll period.

A few notable items in the Application:

  • For administrative convenience, Borrowers with a biweekly (or more frequent) payroll schedule may elect to calculate eligible payroll costs using the eight-week (56-day) period that begins on the first day of their first pay period following their PPP Loan Disbursement Date (the “Alternative Payroll Covered Period”).
    • For example, if the Borrower received its PPP loan proceeds on Monday, April 20, and the first day of its first pay period following its PPP loan disbursement is Sunday, April 26, the first day of the Alternative Payroll Covered Period is April 26 and the last day of the Alternative Payroll Covered Period is Saturday, June 20.
  • Payroll costs are considered paid on the day that paychecks are distributed or the Borrower originates an ACH credit transaction. 
  • Payroll costs are considered incurred on the day that the employee’s pay is earned.
  • For the nonpayroll costs eligible for forgiveness, covered utility payments include: electricity, gas, water, transportation, telephone, or internet access for which service began before February 15, 2020 
  • Caps total eight-week compensation for any individual employee or owner at $15,385 per individual
  • Forgiveness amount lowered if pay reduced by more than 25%
  • Must maintain documentation for six years

PPP Update

Update on PPP Legislation (published June 12, 2020): Senate Passes Paycheck Protection Flexibility Act