SBA Clarifies PPP Loan Good-Faith Certifications
Last week, the Small Business Administration (SBA) issued updated guidance which clarifies that all borrowers who received Paycheck Protection Program (PPP) loans with an original principal amount of less than $2 million will be deemed to have made the required certification concerning the necessity of the loan request in good faith.
Borrowers with loans greater than $2 million that do not satisfy this safe harbor may still have an adequate basis for making the required good-faith certification, based on their individual circumstances in light of the language of the certification and SBA guidance.
SBA has previously stated that all PPP loans in excess of $2 million, and other PPP loans as appropriate, will be subject to review by SBA for compliance with program requirements set forth in the PPP Interim Final Rules and in the Borrower Application Form.
If SBA determines in the course of its review that a borrower lacked an adequate basis for the required certification concerning the necessity of the loan request, SBA will seek repayment of the outstanding PPP loan balance and will inform the lender that the borrower is not eligible for loan forgiveness.
If the borrower repays the loan after receiving notification from SBA, SBA will not pursue administrative enforcement or referrals to other agencies based on its determination with respect to the certification concerning necessity of the loan request. SBA’s determination concerning the certification regarding the necessity of the loan request will not affect SBA’s loan guarantee.
For any questions, please contact Director of Government Affairs Kevin McKenney at kmckenney@bscai.org.
SBA and Treasury Release Paycheck Protection Program Loan Forgiveness Application
Last Friday, The Small Business Administration (SBA) and Treasury Department released the Paycheck Protection Program (PPP) Loan Forgiveness Application and detailed instructions for the application. BSCAI members can view the application here.
The form and instructions advise borrowers on how to apply for forgiveness of their PPP loans, consistent with the Coronavirus Aid, Relief, and Economic Security Act (CARES Act). The SBA will also soon issue regulations and guidance to further assist borrowers as they complete their applications, and to provide lenders with guidance on their responsibilities.
The form and instructions include several measures to reduce compliance burdens and simplify the process for borrowers including:
- Options for borrowers to calculate payroll costs using an “alternative payroll covered period” that aligns with borrowers’ regular payroll cycles;
- Flexibility to include eligible payroll and non-payroll expenses paid or incurred during the eight-week period after receiving their PPP loan;
- Step-by-step instructions on how to perform the calculations required by the CARES Act to confirm eligibility for loan forgiveness;
- Borrower-friendly implementation of statutory exemptions from loan forgiveness reduction based on rehiring by June 30; and
- Addition of a new exemption from the loan forgiveness reduction for borrowers who have made a good-faith, written offer to rehire workers that was declined.
The application and instructions released last Friday will help small businesses seek forgiveness at the conclusion of the eight week covered period, which begins with the disbursement of their loans.
For any questions, please contact Director of Government Affairs Kevin McKenney at kmckenney@bscai.org.
EPA and CDC Issue Updated Guidance on Cleaning and Disinfecting Surfaces
The U.S. Environmental Protection Agency (EPA) and the Centers for Disease Control and Prevention (CDC) recently released updated guidance on cleaning and disinfecting surfaces in homes, workplaces, businesses, schools, and public spaces during the COVID-19 pandemic. The EPA has also publicized a list of more than 300 approved disinfectant products for safely fighting against COVID-19.
House of Representatives Passes Phase 4 COVID-19 Relief Bill
Last Friday, the House of Representatives passed H.R. 6800, the Heroes Act, which provides more than $3 trillion in COVID-19 relief funding for individuals, businesses, and state and local governments. The House legislation was crafted largely along partisan lines and is not expected to receive a vote in the Republican-controlled Senate without significant changes to the bill.
The text of the legislation can be found here and a section-by-section summary here. A detailed summary of the small business provisions can be found here and here.
Brief summary of H.R. 6800, the Heroes Act:
- Provides nearly $1 trillion to state, local, territorial and tribal governments.
- Includes changes to the Payroll Protection Program (PPP) and includes $10 billion for COVID-19 emergency grants through the Economic Injury Disaster Loan (EIDL) program.
- Includes changes to the employee retention tax credit.
- Mandates that the Federal Reserve, through the Main Street Lending Program, provide at least one low-cost loan option that small businesses and small non-profits are eligible for that does not have a minimum loan size, overriding the current $500,000 minimum loan size to participate in the program;
- Requires OSHA to issue an enforceable standard within seven days to require all workplaces to develop and implement infection control plans based on CDC expertise, and prevents employers from retaliating against workers who report infection control problems.
- Provides $200 billion in hazard pay for essential workers.
- Extends the weekly $600 federal unemployment benefit increase through January 31, 2021.
- Provides additional economic impact payments of $1,200 per family member, up to $6,000 per household.
Federal Reserve Announces Further Details on Main Street Lending Program
The Federal Reserve Board recently announced it is expanding the scope and eligibility for the Main Street Lending Program which was established in the CARES Act for businesses with 500 or more employees. The changes include the creation of a third loan option along with expanding the pool of businesses eligible to borrow and lowering the minimum loan size.
Businesses with up to 15,000 employees or up to $5 billion in annual revenue are now eligible, compared to the initial program terms, which were for companies with up to 10,000 employees and $2.5 billion in revenue. The minimum loan size for two of the options was also lowered to $500,000 from $1 million. With the changes, the program will now offer more options to a wider set of eligible small and medium-size businesses. A start date for the program will be announced soon. For all the latest information on the program click here.
For any questions, please contact Director of Government Affairs Kevin McKenney at kmckenney@bscai.org.
IRS Issues Expanded Guidance on Employee Retention Tax Credit
The Internal Revenue Service recently issued an expanded Frequently Asked Questions (FAQ) document on the employee retention tax credit under the CARES Act which can be found here.
For any questions, please contact Director of Government Affairs Kevin McKenney at kmckenney@bscai.org.