The U.S. Small Business Administration (SBA) issued a new interim final rule 5/13/2020, which allows lenders to increase existing Paycheck Protection Program (PPP) loans to partnerships and seasonal employers.
This new interim final rule addresses situations where a partnership completed their loan application before guidance was released April 14. 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.
That ruling meant that partnerships that had already submitted PPP applications, without including partner self-employment income, likely did not receive the maximum amount of PPP loans for which they were eligible. Similarly, an April 28 interim final rule established an alternative criterion for calculating the maximum loan amount for PPP loans issued to seasonal employers.
The interim final rule issued May 13 allows 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 April 14 interim final rule, or to permit the seasonal employer to calculate its maximum loan amount using the alternative criterion posted on April 28.
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.
If you have questions about this new interim final rule, please contact your HW&Co. advisor.