SBA-2020-0032 “Interim Final Rule on Forgiveness” Released
Late on Friday, May 22, 2020, the Small Business Administration (SBA) and the U.S. Department of Treasury (“Treasury”) issued a new interim final rule relating to forgiveness of loans made under the Paycheck Protection Program (PPP).
The Interim Final Rule on Forgiveness (IFR) provides additional detail on the Paycheck Protection Program Loan Forgiveness Application (the “PPP Loan Forgiveness Application”), which was issued on May 15, 2020.
Highlights of the IFR include:
• Clarification of allowable PPP payroll and non-payroll costs
• Clarification of what equates to an “FTE”
• PPP Covered Period vs. Alternative Covered Period
• Definition of “Safe Harbor” and FTE Reduction Exceptions
• Three Reference Period Alternatives
Read the new IFR HERE.
Two PPP Related Bills before Congress
The House bill, called the Paycheck Protection Flexibility Act, H.R. 7010, extends from eight weeks to 24 weeks the time PPP recipients have to spend their funds. The measure also lowers to 60% from 75% the portion of PPP funds borrowers must spend on payroll costs to qualify for full loan forgiveness. That change would allow borrowers to direct more funds to costs such as rent and utilities.
A bill close to a vote in the Senate would double the covered period of PPP spending to 16 weeks but would not change the 75% payroll cost requirement. Treasury Secretary Steven Mnuchin has maintained support for the 75% threshold.
MEDB expects further clarification within the next 10 days and is closely monitoring the situation. Stay tuned as we plan the next webcast to guide you through the forgiveness application.