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PPP Loan Update - Extension of Repayment Deadline and Loan Increases

On May 13, 2020, the U.S. Small Business Administration (SBA) provided an update to the PPP Frequently Asked Questions with the inclusion of Question 47.

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On May 13, 2020, the U.S. Small Business Administration (SBA) provided an update to the PPP Frequently Asked Questions with the inclusion of Question 47.

On May 13, 2020, the U.S. Small Business Administration (SBA) provided an update to the PPP Frequently Asked Questions with the inclusion of Question 47:

Question 47:

Question: An SBA interim final rule posted on May 8, 2020 provided that any borrower who applied for a PPP loan and repays the loan in full by May 14, 2020 will be deemed by SBA to have made the required certification concerning the necessity of the loan request in good faith. Is it possible for a borrower to obtain an extension of the May 14, 2020 repayment date?

Answer: Yes, SBA is extending the repayment date for this safe harbor to May 18, 2020, to give borrowers an opportunity to review and consider FAQ #46. Borrowers do not need to apply for this extension. This extension will be promptly implemented through a revision to the SBA’s interim final rule providing the safe harbor.

Interim Final Rule on Loan Increases

On May 13, 2020, the U.S. Small Business Administration issued Interim Final Rule on Loan Increases. This guidance covers the following areas:

  1. Loan Increases
  2. Disbursements and 1502 Reporting on Increased PPP Loans

Items of Note:

  1. Partnerships and LLCs that didn’t include compensation for its partners or members (net earnings from self-employment) can submit a request to increase their loan with their lenders
  2. The increase can only be requested if the lender didn’t submit SBA Form 1502

Partnerships and LLCs that submitted an application that excluded partner or member compensation should contact their lender as soon as possible to request this increase. For guidance on How to Calculate Loan Amounts see Question 4 from the SBA’s published guidance.  Partnerships and LLCs should be prepared to provide their 2019 IRS Form 1065 (including K-1s).

 

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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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