Treasury Clarifies PPP Loan Eligibility
Many employers are considering or have applied for U.S. Small Business Administration (SBA) Paycheck Protection Program (PPP) loans, which were authorized pursuant to the Coronavirus Aid, Relief, and Economic Security Act (CARES Act). The CARES Act was signed into law on March 27, 2020 and allocates $2.2 trillion in support of individuals and businesses affected by the coronavirus pandemic and economic downturn. The PPP loan program has been funded with $350 billion.
The PPP loan program provides loan forgiveness to employers for retaining employees by temporarily expanding the traditional SBA 7(a) loan program. SBA will forgive loans if all employees are kept on the payroll for eight weeks and the money is used for payroll, rent, mortgage interest, or utilities.
SBA released an Interim Final Rule late last week with a drafting error that caused confusion about the eligibility requirements for the loan. Specifically, the rule appeared to limit eligibility for construction employers to only those employers with less than a certain business volume even if the employer has fewer than 500 employees. Over the weekend and yesterday, SWACCA and other groups expressed concern about this language in the Interim Rule to regulators and members of Congress. SWACCA was informed this morning that last night, in response to these and other concerns raised about the implementation of the PPP loan program, the Treasury Department posted revised Frequently Asked Questions that, among other things, clarify this issue.
Specifically, Question #3 of the updated FAQs makes clear that employers are eligible for a PPP loan if the business: a) has 500 or fewer employees whose principal place of residence is the United States; or b) qualifies as a small business concern (as defined in section 3 of the Small Business Act); or c) meets the SBA employee-based size standards for the industry in which it operates. The document makes clear that borrowers and lenders may rely on its guidance as SBA’s interpretation of the CARES Act and of the PPP Interim Final Rule. The updated FAQ document is available here.
A complete list of guidance available from Treasury is available here.
The SBA and Treasury began accepting PPP loan applications on Friday, April 3rd. Any SWACCA member interested in the program is urged to work with their bank to submit an application as soon as possible. More information on the program is available here.
© 2020 Signatory Wall and Ceiling Contractors Alliance (SWACCA). All rights reserved.