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Paycheck Protection Program Revised Interim Final Rule on Loan Forgiveness and Review Procedures

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Insights  <  Paycheck Protection Program (PPP) Revised Interim Final Rule on Loan Forgiveness and Review Procedures

On June 22, 2020, the U. S. Small Business Administration (SBA) issued Interim Final Rule on Revisions to Loan Forgiveness Interim Final Rule and SBA Loan Review Procedures Interim Final Rule.  The interim rule covers:

  1. Changes to the First Loan Forgiveness Rule
  2. Changes to the First Loan Review Rule

The complete interim rule is available on the U.S. Treasury website.  This interim rule was issued to supplement the PPP revised loan forgiveness application and instructions issued on June 16, 2020.  Read our article covering the key takeaways from the application and instructions.

Here are the key takeaways that weren’t addressed in our Paycheck Protection Program Revised Loan Forgiveness Application

  1. A borrower may submit a loan forgiveness application any time on or before the maturity date of the loan – including before the end of the covered period (if all loan proceeds were utilized)
  2. If the borrower does not apply for loan forgiveness within 10 months after the last day of the covered period, or if the SBA determines that the loan is not eligible for forgiveness (in whole or in part), the PPP loan is no longer deferred and the borrower must begin paying principal and interest.
  3. Limitation on owner employees and self-employed individuals:
    • 8-week period – Lesser of $15,385 or 8-weeks’ worth (8/52) of 2019 compensation in total across all businesses.
    • 24-week period – Lesser of $20,833 or 2.5-months’ worth (2.5/12) of 2019 compensation in total across all businesses.
    • Compensations inclusion items by entity or filing type:
      • C-corporation owner-employees are capped by the amount of their 2019 employee cash compensation and employer retirement and health insurance contributions.
      • S-corporation owner-employees are capped by the amount of their 2019 employee cash compensation and employer retirement contributions made on their behalf, but employer health insurance contributions made on their behalf cannot be separately added because those payments are already included in their employee cash compensation.
      • Schedule C or F filers are capped by the amount of their owner compensation replacement, calculated based on 2019 net profit.
      • General partners are capped by the amount of their 2019 net earnings from self-employment (reduced by claimed section 179 expense deduction, unreimbursed partnership expenses, and depletion from oil and gas properties) multiplied by 0.9235.
      • For self-employed individuals, including Schedule C or F filers and general partners, retirement and health insurance contributions are included in their net self-employment income and therefore cannot be separately added to their payroll calculation.
  1. Reductions in loan forgiveness:
    • If the borrower applies for forgiveness before the end of the covered period, it must account for the salary reduction for the full 8 or 24-week covered period (depending on the period selected).
    • Borrowers that can certify that they have documented in good faith that their reduction in business activity during the covered period stems directly or indirectly from compliance with such COVID Requirements or Guidance are exempt from any reduction in their forgiveness amount stemming from a reduction in FTE employees during the covered period.

Calculating Loan Forgiveness

We have developed the blumshapiro PPP Loan Forgiveness Toolkit & Calculator  to assist you in making your calculations. We will continue to update the blumshapiro PPP Loan Forgiveness Toolkit & Calculator as additional guidance becomes available. Our loan toolkit will We expect to issue an updated loan forgiveness tool kit as soon as additional FAQs are released related to loan forgiveness.  As long as the blumshapiro PPP Loan Forgiveness Toolkit & Calculator is downloaded via blumshapiro.com, all downloaders will get notified of any changes to the PPP Loan Forgiveness Toolkit & Calculator.

PPP Loan Forgiveness Assistance

blum has been on the forefront of interpreting PPP guidance and providing trusted resources for clients to keep them apprised of constant changes and providing the most up-to-date information to assist in calculating loan forgiveness. Our team is working with clients to assist them with navigating through compliance requirements of the loan forgiveness program, to ensure forgiveness is received, help expedite the loan forgiveness process and provide a reliable and trusted source of information. Learn more about our loan forgiveness services >>

PPP Assistance Sell Sheet


For more information on our loan forgiveness services, please contact us here:


 

Disclaimer: Any written tax content, comments, or advice contained in this article is limited to the matters specifically set forth herein. Such content, comments, or advice may be based on tax statutes, regulations, and administrative and judicial interpretations thereof and we have no obligation to update any content, comments or advice for retroactive or prospective changes to such authorities. This communication is not intended to address the potential application of penalties and interest, for which the taxpayer is responsible, that may be imposed for non-compliance with tax law.

Disclaimer:  The contents of this resource are for general informational purposes only. While every effort has been made to ensure its accuracy, the information is provided “as is” and no representations are made that the content is error-free. We have no obligation to update any content, comments or other information for retroactive or prospective interpretations or guidance provided by regulators, financial institutions or others. The information is not intended to constitute legal advice or replace the advice of a qualified professional. There are areas of the CARES Act where additional clarification from the Treasury Department and the SBA is needed. Your judgment and interpretation of the act may be needed. Users should consult with their legal counsel and representatives of the lending institution regarding the proper completion of their application and supporting documentation.

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