Important Changes to PPP for Seasonal Businesses and Partnerships, and Extension of Safe Harbor Rule

Allowable PPP Loan Increases:

In an Interim Final Rule released on May 13^th the SBA and Treasury formalized a process allowing lenders to modify loan amounts for borrowers already approved for a PPP loan when guidance released after the borrowers original loan was approved would allow for a higher loan amount. 

Most likely to be impacted by this new rule are seasonal businesses where payroll was calculated on a 12-month average and partnerships where partner compensation was not included in the original loan amount. 

Modifications to the loan amount and final disbursements must be made to the loans prior to the lenders reporting their disbursed loans to the SBA.  Those reports are due no later than May 22^nd. 

To review this new Interim Final Rule, visit the Treasury website HERE

SBA’s Review of Good-Faith Certifications and Extended Safe Harbor Date:

Treasury has released an updated FAQ including two new questions offering further explanation of how SBA will review a borrowers’ required good-faith certification relative to their need for a PPP loan and extended the safe harbor date for borrowers to return funds they don’t feel they qualify for to May 18^th. 

This extension will allow borrowers time to review the additional information provided by Treasury and SBA. When submitting a PPP application, all borrowers must certify in good faith that “current economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant.”

SBA, in consultation with the Department of the Treasury, has determined that the following safe harbor will apply to SBA’s review of PPP loans with respect to this issue: Any borrower that, together with its affiliates, received 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 may still have an adequate basis for making that good-faith certification based upon their individual circumstances. Borrowers who feel they can no longer make that certification in good-faith based upon the guidance issued by Treasury and SBA may now return their PPP loan in full by May 18^th and will be deemed by the SBA to have made the required certification in good faith.

To review the updated FAQ document, visit the Treasury website HERE