On May 15, 2020, the United States Treasury Department issued its long awaited Paycheck Protection Program ("PPP") Loan Forgiveness Application Instructions ("Forgiveness Application"), including a PPP Loan Forgiveness Calculation Form (with instructions) and a list of expected supporting documents to accompany the Forgiveness Application (3245-0407 SBA Form 3508 PPP Forgiveness Application.pdf).
UPDATE AS OF MAY 5, 2020 - SBA EXTENDS SAFE HARBOR TO MAY 14, 2020 AND PROMISES FURTHER GUIDANCE PRIOR TO THEN
The Federal Reserve on April 9, 2020 announced the basic preliminary terms of its Main Street Lending Program ("MSLP") authorized under the CARES Act. The MSLP will enhance support for small and mid-sized businesses "that were in good financial standing before the crisis" by offering 4-year loans to companies employing up to 10,000 workers or with revenues of less than $2.5 billion.
The Paycheck Protection Program under the CARES Act offers critical capital to small businesses but has very specific and limited permitted uses. While the loans are potentially forgivable, there are important rules that limit and reduce forgiveness [Key Features and PPP Loans Interim Final Rule]. Coolidge Strategic Advisory Services has expanded its 13-week Cash Flow Projection Tool to include a tool for projecting and tracking use of PPP loan proceeds and optimizing the amount of loan forgiveness [13-week cash flow and PPP loan tracking templates V2 04132020.xlsx - Note: this file will automatically download to your computer into your Downloads files].
Congress has expanded the application of the Small Business Reorganization Act of 2019 (SBRA) to make available the streamlined and, therefore, less expensive form of business reorganization to more businesses.
On Thursday, April 2, 2020, the U.S. Small Business Administration (SBA) issued an Interim Final Rule (IRF), which constitutes the much-anticipated "Regulations" called for in the CARES Act on implementation of the Paycheck Protection Program (PPP). While the IRF is considered "interim" and requests public comments over a 30-day period, it is anticipated that lenders will rely on it once they begin accepting and processing applications for those small businesses seeking PPP loans. We previously explained the program in our blog post found here.
On March 27, 2020, the President signed the Coronavirus Aid, Relief, and Economic Security ("CARES") Act. Our separate post outlines the Paycheck Protection Program ("PPP"), which is administered by the U.S. Small Business Administration (SBA), and is a distinct component of the Act. Inherent to the PPP (and other SBA loans modified by the Act), is the question of "affiliation" as it pertains to businesses, their owners, and their parent and subsidiary entities and affiliations. Importantly, the SBA's size and affiliation rules are broader than most common understandings of the affiliation concept in other aspects of the law and will play a pivotal role in determining whether or not a particular business may be eligible for a PPP (or other SBA) loan under the CARES Act.
UPDATE: On March 31, 2020, the Small Business Administration and the U.S. Treasury released the Application Form for the new SBA PPP Loan forgiveness program, which we have included at the end of this article.
This is the third in a series of articles discussing the impact that the COVID-19 (coronavirus) pandemic and the governmental responses to it have had on employee benefits. The first two articles dealt with employer group health plans, continuation coverage, HIPAA privacy, and other welfare benefit plans.