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Recent Updates to Coronavirus Legislation

Watch this page for timely updates regarding recently issued guidance relative to the Families First and CARES Acts.

Updated April 17, 2020

SBA Closes Access to PPP Loans

As of April 16th the SBA has closed access to the PPP loans. We are monitoring congressional progress on releasing additional funds for the Paycheck Protection Program, which has been under discussion.

Non-Filers: Enter Payment Info Here

The IRS portal for relief checks has been launched. Non-filers may now submit information to direct the deposit of relief funds. Other functions are expected to go live later in the month of April. More information is available on the IRS website.

SBA Updates for PPP loans

As the time period for Small Business Administration (SBA) loans through the Paycheck Protection Program (PPP) began the SBA issued some clarifications regarding certain aspects of processing the loan applications. PPP loan rules are outlined on the SBA website.

1099 contractors

One big question that has been debated is if a company can include the independent contractors they pay on a 1099 basis in their calculation of monthly average payroll costs. The Interim Final Rules indicated they cannot. The SBA clarification was that Independent Contractors are able to apply for a PPP loan on their own, and therefore cannot be included in another borrower’s PPP loan calculation.

The next question pertaining to 1099s is if loan proceeds can be used to pay independent contractors during the 8 week period can then be forgiven as approved expenditures. The clarification indicates they cannot, stating the same logic that an Independent Contract can apply for a loan directly.

Loan Forgiveness

The amount of loan forgiveness can be up to the full principal amount of the loan and any accrued interest. The borrower is not responsible for ANY loan payment if all loan proceeds are used for forgivable purposes and employee compensation levels are maintained. Not more than 25% of loan forgiveness amount may be attributable to non-payroll costs.

Timing

The eight week period starts with the loan funding date. If the loan is not forgiven you will not have to make any payments for six months following the date of disbursement of the loan, yet interest will continue to accrue. If the loan is not forgiven the maturity date is 2 years.

Other key changes or clarifications in the Rules issued on April 2, 2020:

  • Interest rate will be 100 basis points or one percent.
  • No collateral or personal guarantees will be required.
  • All loans will be processed by all lenders under delegated authority and lenders will be permitted to rely on certifications of the borrower in order to determine eligibility of the borrower and the use of loan proceeds.
  • Knowing misuse of PPP funds will make the borrower subject to additional liability such as charges for fraud.
  • All SBA 7(a) lenders are approved to make PPP loans.

As the loan period commences we are expecting to see more trending topics and updates from the SBA. The FD CARES Act Program team will continue to publish updates as more announcements are made.


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