Small Business Administration (SBA) and Treasury Announce Plans to Update Paycheck Protection Program (PPP) Applications and Rules, State Deadline for PPP Loan Approvals Remains June 30, 2020
On June 8, 2020, the U.S. Small Business Administration (SBA) and Treasury Department issued a joint press release announcing their plans to update Paycheck Protection Program (PPP)-related applications, rules and other guidance in light of the enactment of the PPP Flexibility Act on June 5, 2020.
The press release states that SBA, in consultation with the Treasury Department, will “promptly” issue rules and guidance, a modified borrower application form and a modified loan forgiveness application implementing the PPP Flexibility Act amendments.
The joint release also provides clarity on two specific issues raised by the PPP Flexibility Act. In the words of the release, the updated SBA forms and guidance will:
- “Lower the requirements that 75 percent of a borrower’s loan proceeds must be used for payroll costs and that 75 percent of the loan forgiveness amount must have been spent on payroll costs during the 24-week loan forgiveness covered period to 60 percent for each of these requirements. If a borrower uses less than 60 percent of the loan amount for payroll costs during the forgiveness covered period, the borrower will continue to be eligible for partial loan forgiveness, subject to at least 60 percent of the loan forgiveness amount having been used for payroll costs.” (emphasis added)
- “Confirm that June 30, 2020, remains the last date on which a PPP loan application can be approved.” (emphasis added)
On the first point relating to payroll costs, some elected officials and commentators had expressed concern that “partial” loan forgiveness would be unavailable to borrowers who failed to spend at least 60% of the overall PPP loan amount on payroll costs. However, the press release confirms that SBA’s forms and rules will continue to allow for “partial” forgiveness.
On the second point relating to the PPP loan approval deadline, many commentators had interpreted the PPP Flexibility Act to extend the loan approval deadline to December 31, 2020. However, SBA and the Treasury Department signaled that the PPP loan approval deadline will remain June 30, 2020.
The Miller Johnson interdisciplinary PPP team will continue to monitor these updates and other PPP-related developments. In addition, as the complexity of the PPP and related compliance challenges evolve, we encourage PPP borrowers to reach out to their Miller Johnson contacts to learn more about our flat-fee PPP Audit and Compliance Preparedness Program. This program offers clients a strategic solution to identify, gather and organize relevant documents and performance data to ensure their business is best positioned to comply with the ever-changing rules governing the PPP. The program will also involve identifying key legal arguments so that clients are prepared for any potential enforcement action or inquiry. Additional details regarding this program are available here.