The U.S. Small Business Administration (SBA) has extended the safe harbor for returning Paycheck Protection Program (PPP) loans to May 18.
In addition, some PPP loans were approved to partnerships or seasonal employers before additional guidance (April 14 in the case of partnerships and April 28 in the case of seasonal employers) was issued. As a result, those businesses may not have received PPP loans in the maximum amount for which they are eligible. The April 14 interim rule prohibited partners in partnerships from submitting a separate PPP loan application for themselves as self-employed individuals. Instead, the self-employment income of general active partners was to be reported as a payroll cost, up to $100,000 annualized, on a PPP loan application filed by, or on behalf of, the partnership.
Accordingly, the SBA has now authorized all PPP lenders to increase existing PPP loans to partnerships or seasonal employers to include appropriate amounts to cover partner compensation in accordance with the interim final rule posted on April 14, 2020 or to permit the seasonal employer to calculate its maximum loan amount using certain criteria posted on April 28, 2020.
In addition, although the interim final rule on disbursements posted on April 28 requires PPP loans to be made in a single disbursement, if a PPP loan that is increased has already been disbursed, this interim final rule authorizes the lender to make an additional disbursement of the increased loan proceeds prior to submission of the initial SBA Form 1502 that includes that loan.
The information presented here should not be construed as legal, tax, accounting, or valuation advice. No one should act on such information without appropriate professional advice and after a thorough examination of the particular situation.