SBA Issues New Guidance on Paycheck Protection Program
Following last Friday’s passing of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), businesses are eager to obtain much-needed relief, but there are uncertainties about which forms of relief are available to them. Questions remain as to whether and to what extent rules applicable to existing Small Business Administration (SBA) loan programs or other existing rules relating to issues such as how to calculate small business size or number of employees, whether entities are affiliates, how much information is required to be disclosed, how to calculate the amount of funding that can be obtained, and other matters apply to the CARES Act’s Paycheck Protection Program (PPP).
In an effort to address some of these outstanding questions, the SBA issued a preliminary version of an “interim final rule” which provides some guidance on the implementation of the small business assistance provisions relating to the PPP. We anticipate the interim final rule will be published in the Federal Register in the coming days.
In addition, although a PPP loan application had been provided earlier this week, on the evening of April 2 an updated loan application was released. On the morning of April 3, the SBA still had the old application form on its site, but it was updated at approximately 9:20 am EDT with the Treasury form. It is important that applicants ensure they are not looking at the wrong form, as there are substantive differences between the two.
The “interim final rule” does not resolve all questions, and in fact creates some ambiguity. With loan applications already being submitted as of today, April 3, 2020 and the SBA’s statement in no uncertain terms that loans will be issued on a first-come, first-served basis, there is a need for all due deliberate speed to file. Many applicants were already completing applications based on the existing guidance and loan application, and when they received the “interim final rule” and updated application were working to adjust their applications in the expectation that it would be issued on Friday, April 3. The “interim final rule” and updated PPP application are available online.