Late on June 22, the Small Business Administration (SBA) and U.S. Department of Treasury released updated Loan Forgiveness rules. The improvements of the PPP Flexibility Act, new details on loan forgiveness timing, and required documentation for “business activity” exemptions from loan forgiveness reduction are included below.
New Improvements – Confirmed for PPP Recipients
Clarity on Timing for Loan Forgiveness Process
A restaurant can submit its loan forgiveness application before the end of the covered period if the restaurant has used all of the loan funds for which the business is seeking loan forgiveness.
Documentation Required to Demonstrate “Business Activity” Disruption and Obtain an Exemption from Loan Forgiveness Reductions Regarding FTE Rehiring
SBA Example: A PPP borrower is in the business of selling beauty products both online and at its physical store. During the covered period, the local government where the borrower’s store is located orders all non-essential businesses, including the borrower’s business, to shut down their stores, based in part on COVID-19 guidance issued by the CDC in March 2020. Because the borrower’s business activity during the covered period was reduced compared to its activity before February 15, 2020 due to compliance with COVID Requirements or Guidance, the borrower satisfies the Flexibility Act’s exemption and will not have its forgiveness amount reduced because of a reduction in FTEs during the covered period, if the borrower in good faith maintains records regarding the reduction in business activity and the local government’s shutdown orders that reference a COVID Requirement or Guidance as described above.
The Association team is continuing to review the interim final rule (IFR), please contact Aaron Frazier, Director of Healthcare and Tax Policy, with questions or recommendations.
Additional Update: As of June 19, SBA and Treasury plan to publicly share PPP recipient business names, addresses, NAICS codes, zip codes, business type, demographic data, non-profit information, jobs supported, and PPP loan amount ranges as follows:
For loans below $150,000, totals will be released, aggregated by zip code, by industry, by business type, and by various demographic categories. When more information becomes available, we will share with members.