News Detail

SBA Issues Interim Final Rule Implementing Changes to the Paycheck Protection Program

The Small Business Administration (SBA) has published a new interim final rule regarding the Paycheck Protection Program (PPP) in response to passage of the Paycheck Protection Program Flexibility Act of 2020 (PPPFA), which amended the Coronavirus Aid, Relief, and Economic Security (CARES) Act and was signed into law on June 5, 2020. In particular, the PPPFA amends CARES Act provisions relating to PPP loan terms and loan forgiveness.

Specifically, the interim final rule: (1) extends the end date of the “covered period” governing PPP loan use, loan eligibility, and related requirements from June 30, 2020 to December 31, 2020; (2) provides a five-year maturity for loans made on or after June 5, 2020 and provides an option for loans made prior to that date to extend maturity from two years to five years at the mutual agreement of the borrower and lender; (3) extends the loan forgiveness period from eight weeks to 24 weeks, noting that borrowers may opt to keep the forgiveness period at eight weeks for loans made prior to June 5, 2020; (4) clarifies that if a borrower submits its forgiveness application within 10 months of the end of the loan forgiveness period, the borrower will not have to make any payments on the loan before the date SBA remits the forgiven amount to the lender; and (5) provides that borrowers that use less than 60 percent of their PPP loan amount for payroll costs during the forgiveness covered period will still be eligible for partial loan forgiveness, stating that the 60 percent requirement is proportional limit on nonpayroll costs as a share of the borrower’s loan forgiveness amount, rather than as a threshold for receiving any loan forgiveness.

The provisions in this interim final rule related to loan forgiveness and deferral periods for PPP loans are retroactively effective March 27, 2020 – the date that the CARES Act was enacted.  The provision in this interim final rule relating to the maturity date of PPP loans is effective June 5, 2020 – the date that the Flexibility Act was enacted.  All other provisions are effective today, June 16, 2020.  Comments on the rule are due by August 17, 2020 and can be submitted via the federal eRulemaking portal using Docket ID SBA-2020-0035.

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