June 26, 2020

The U.S. Small Business Administration (SBA) and the Treasury Department updated their Paycheck Protection Program Frequently Asked Questions (FAQs) to reflect two interim final rules implementing provisions of the Paycheck Protection Program Flexibility Act.

Specifically, the FAQs have been updated to reflect: (1) the fact that PPP loans issued on or after June 5, 2020 have a five-year maturity and PPP loans issued before June 5, 2020 have a two-year maturity, unless the borrower and lender mutually agree to extend the term of the loan to five years (Question 49); and (2) relaxed eligibility criteria for PPP applicants who have been convicted of, pleaded guilty or nolo contendere to, or commenced any form of parole or probation for certain felonies (Question 12).

With regard to Question 12, this updated FAQ expands PPP loan eligibility for borrowers with criminal convictions. Specifically, question 12 states that a business is ineligible due to an owner’s criminal history only if an owner of 20 percent or more of the equity of the applicant: (1) is presently incarcerated or, for any felony, is presently subject to an indictment, criminal information, arraignment, or other means by which formal criminal charges are brought in any jurisdiction; or (2) has been convicted of, pleaded guilty or nolo contendere to, or commenced any form of parole or probation (including probation before judgment) for, a felony involving fraud, bribery, embezzlement, or a false statement in a loan application or an application for federal financial assistance within the last five years or any other felony within the last year.

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