APRIL 24, 2020 – PPP UPDATES

There have been two new major developments in the Payroll Protection Program (“PPP”). President Trump just signed a bill into law approving additional funds for the PPP and the SBA has issued new guidelines for the PPP.

I. Since the $349 billion of loans to small businesses was quickly exhausted, the Senate and the House of Representatives earlier this week approved an additional $484 billion in COVID-19 relief. On April 24, 2020 President Trump signed the bill. Some of the funds are earmarked for hospitals and testing. However, $310 billion was allocated to the PPP. Some of those funds will be permitted to be utilized only by smaller banks to offset some of the allegations that large banks did not get the first round of loans to the most needy smaller businesses. President Trump is expected to sign the bill today.

II. The SBA and Treasury Department provided further guidance on PPP loans by updating its FAQs Click here for the FAQs.

The FAQs provide answers to many unclear issues that were in the previously published PPP Interim Final Rule. Click here for our blog on the PPP Interim Final Rule.

The FAQs answer such questions as:

Lenders’ duties to confirm Borrower’s average monthly payroll costs.

Answer –

-Lenders have no duty to confirm, but lenders are expected to eventually provide a good faith review.

Further clarification regarding number of employees.
Standards comparing SBA definitions of a small business to the PPP Act.
Applicability of affiliation rules. This has received a lot of press because of public perception of franchises, subsidiaries, etc.
Whether non-cash compensation in excess of $100,000 (annualized) is excluded in the definition of payroll costs.

Answer –

– employer contributions to defined benefit or defined contribution plans,
– payment of group health care coverage,
– payment of state and local taxes
are INCLUDED in payroll costs for both the amount of the Loan and forgiveness.