Federal Government COVID-19 Fiscal Stimulus – June 22, 2020 Update

Remember: If you plan to apply for a Paycheck Protection Program (“PPP”) loan and have not yet done so, June 30, 2020 is the last day a PPP loan can be approved by a qualified lender.

New PPP Loan Forgiveness Forms Issued.

Last week, the small Business Administration (“SBA”) released two new loan forgiveness applications.

The first new application revises the existing application to reflect the PPP Flexibility Act (“PPPFA”), signed into law on June 5. The new “full application” and its instructions take fewer pages than the old application. The new application makes clear a couple of topics about which there were questions. (1) Health insurance for S corporation shareholders is not allowed as part of the total payroll costs computation (the same treatment dictated for self-employed and general partners). (2) Retirement contributions for S corporation owners are allowed in the calculating total payroll costs (and not allowed for self-employed and general partners).

Here is a link to the new full application and its instructions.

SBA introduced Form 3508EZ. It is a one page form plus certifications and representations. It applies to three kinds of borrowers:

• Are self-employed and have no employees; OR
• Did not reduce the salaries or wages of their employees by more than 25%, and did not reduce the number of employees or the average paid hours of their employees; OR
• Experienced reductions in business activity as a result of health directives related to COVID-19 and did not reduce the salaries or wages of their employees by more than 25%.

The descriptions above of applicable borrowers are summaries. Additional requirements can apply.

Additional documents must still be submitted with Form 3508EZ.

Treasury Secretary Mnuchin is reported to have said that Form 3508EZ should take 20 minutes to complete – 10 minutes to gather the information and 10 minutes to complete the form. Yeah, sure.

Here is a link to Form 3508EZ and its instructions, as it stands on June 22.

Interim Final Rule on Revisions to the Third and Sixth Interim Final Rules.

Yes, you read that correctly. Highlights include:

• Incorporates provisions of the PPPFA
• Eligible payroll costs per employee
  • Capped at $46,154 for 24-week covered period borrowers
  • Remains capped at $15,385 for 8-week covered period borrowers
• Owner Compensation Replacement
  • Capped at the lesser of $20,833 or 2.5 months’ worth of 2019 net profit for 24-week covered period borrowers ($100,000/12 months * 2.5 months = $20,833)
  • Remains capped at $15,385 for 8-week covered period borrowers
  • Instructions to loan forgiveness application indicate that all owners are capped at these amounts (including S corporation and C corporation owners).

Here is a link to the “IFRRTSIFR.”

All this guidance and questions still remain. For example:

• Who is an owner-employee?
• What are self-employed/general partners to use for 2020 compensation used in calculations?
• Can a borrower apply for forgiveness before end of the applicable covered period?

We expect more FAQs that may address these and other questions to be issued soon.

“Can I file for PPP Loan forgiveness now?”

Probably not. Most, if not all, loan recipients need, at least, the additional guidance expected soon from SBA. That guidance will probably be again in the form of FAQs.

The SBA and Department of Treasury (“Treasury”) to Publish Names of Some PPP Loan Recipients

Friday (June 19) evening, SBA and Treasury announced in a news release that they have agreed with bipartisan leaders of the Senate’s Small Business Committee to make public additional data regarding the PPP.

SBA will disclose the business names, addresses, NAICS codes, zip codes, business type, demographic data (unidentified as of yet), non-profit information, jobs supported, and loan amount ranges as follows:

• $150,000-350,000
• $350,000-1 million
• $1-2 million
• $2-5 million
• $5-10 million

 

SBA Reopens Economic Injury Disaster Loan (“EIDL”) and EIDL Advance Program Portal

The SBA has resumed processing EIDL applications that were submitted before its portal stopped accepting new applications on April 15 and is processing those applications on a first-come, first-served basis. On June 15, SBA began accepting new EIDL and EIDL Advance applications from qualified small businesses and certain U.S. agricultural businesses.

VKM

For more information check out HM&M’s COVID-19 Resources page.

HM&M COVID-19 Resources