The SBA established The Paycheck Protection Program (PPP) to provide funds to small businesses that have been negatively affected by the Coronavirus pandemic. Small businesses must meet certain criteria, as the loans are granted for uses such as rent, utilities, mortgage interest and payroll costs, and may be forgiven if they are used in accordance with PPP terms and conditions. However, due to the SBA’s initiative to disperse money in a timely fashion to small businesses, it has left multiple requirements of the program to be ambiguous, therefore needing the SBA to provide additional guidance of the program.
Here’s the latest:
On April 28, the SBA released an update to its FAQ document that can be found here: https://home.treasury.gov/system/files/136/Paycheck-Protection-Program-Frequently-Asked-Questions.pdf
On April 28th, the SBA also provided guidance for:
- Interim Final Rule on Additional Criterion for Seasonal Employers
- Interim Final Rule on Disbursements
Treasury Secretary, Steve Mnuchin, announced on April 28th that all companies receiving over $2 million in PPP loans will be reviewed and audited by the SBA before there is loan forgiveness which may result in investigations for fraud, abuse, and other unethical violations.
Key Considerations:
- If a business receives loan funding and later determines that it does not comply with the terms and conditions of the PPP, then the entire loan must be repaid by May 7, 2020.
- If a business has been granted the PPP loan, it is required to keep detailed documentation of its eligibility, how the funds are being used, and compliance with the forgiveness terms of the program.
- Businesses that do not adhere to the PPP’s terms and conditions or are later found to be ineligible will be subject to legal or regulatory consequences.
As we expect additional guidance from the SBA, we advise that all PPP loan applicants and recipients visit: www.sba.gov/funding-programs/loans/coronavirus-relief-options/paycheck-protection-program and home.treasury.gov for ongoing updates.
If you have any questions, please contact your Urish Popeck advisor.