PPP Loan Forgiveness Application and Main Street Lending Program
May 19, 2020
Dear Clients, Colleagues and Friends,
Presti & Naegele continues to monitor the latest COVID-19 developments that impact our clients. Below is information we believe may be useful to you.
Paycheck Protection Program (PPP) Loan Forgiveness Application
The Small Business Administration (SBA) stated on the PPP Borrower Application Form that all borrowers must certify in good faith that “Current economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant”. The SBA has determined, that any borrower which, together with its affiliates, received PPP loans with an original principal amount of less than $2 million will be deemed to have made the certification in good faith (SBA-FAQ 46). This determination is welcomed news for business owners who were uncertain about the application of the general good faith certification.
The SBA recently issued guidance on May 13, 2020 (a new interim final rule) which would allow lenders to increase PPP loans previously applied for by (1) Partnerships and (2) Seasonal Employers.
(1) Partnerships – The ruling allows for any PPP loan to be increased if it did not include in the necessary payroll costs any amounts for partner compensation. The rule further explains that the self-employment income of general active partners could be reported as a payroll cost, up to $100,000 annualized, on a PPP loan application filed by or on behalf of the partnership.
(2) Seasonal Employers – If a seasonal employer received a PPP loan before April 28, 2020, the date which alternative criterion became available to determine the maximum loan amount for seasonal employers, the loan amount can be increased based on a revised calculation using the alternative criterion.
To apply for either of the above increased loan amounts, the lender may electronically submit a request through SBA’s E-Tran Servicing site to increase the PPP loan amount, even if the loan has been fully disbursed, providing that the lender’s first SBA Form 1502 report to SBA on the PPP loan has not been submitted. If either situation above applies to you, please contact your PPP lender immediately. SBA Form 1502 is required to be submitted within 20 calendar days after a PPP loan is approved or, for loans approved before availability of the updated SBA Form 1502 reporting process, by May 22, 2020.
The SBA loan forgiveness application is now available and PPP loan borrowers are encouraged to review. The application must be submitted to your lender, who will ultimately be responsible for assessing the forgiveness. There may be changes to the application as further guidance is issued in the coming weeks. The application may be found through the link below:
Main Street Lending Program
The Federal Reserve has designed the Main Street Lending Program to provide support to small and medium-sized businesses and their employees across the United States, in the form of program loans, through approved lending institutions. The Federal Reserve is currently working to create the infrastructure necessary to operationalize the program, and the Board will provide updates on their website once finalized. For more information on the Main Street Lending Program, including term sheets & FAQ’s, please visit: https://www.federalreserve.gov/monetarypolicy/mainstreetlending.htm
If you have any questions or need further information, please contact your P&N professional directly, or dial 212-736-0055 for immediate help. For additional updates and guidance regarding COVID-19, please visit the ‘News’ section of our website at www.pntax.com. Stay Safe.
Presti & Naegele