Small Business Financial Aid
Senate Votes to Pass PPP Flexibility Act: Bill Heads to President for Signature
The U.S. Senate on Wednesday, June 3, voted to pass the Paycheck Protection Program (PPP) Flexibility Act, which now heads to the President for his signature. The House of Representatives passed the bill last week, also with bipartisan support.
The bill makes a number of significant changes to the PPP, including:
- Extending the expense forgiveness period from eight weeks to 24 weeks
- Reducing the payroll ratio requirement to 60 percent
- Increasing the loan repayment period from two to five years, on new loans
- Allowing payroll tax deferment for PPP recipients
- Extending the June 30 rehiring deadline
SBA Releases PPP Loan Forgiveness Application
Guidance on the “Good-Faith Certification” in PPP Application
- Question: How will SBA review borrowers’ required good-faith certification concerning the necessity of their loan request?
Answer: When submitting a PPP application, all borrowers must certify in good faith that “[c]urrent economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant.” SBA, in consultation with the Department of the Treasury, has determined that the following safe harbor will apply to SBA’s review of PPP loans with respect to this issue: Any borrower that, together with its affiliates, received PPP loans with an original principal amount of less than $2 million will be deemed to have made the required certification concerning the necessity of the loan request in good faith.
SBA has determined that this safe harbor is appropriate because borrowers with loans below this threshold are generally less likely to have had access to adequate sources of liquidity in the current economic environment than borrowers that obtained larger loans. This safe harbor will also promote economic certainty as PPP borrowers with more limited resources endeavor to retain and rehire employees. In addition, given the large volume of PPP loans, this approach will enable SBA to conserve its finite audit resources and focus its reviews on larger loans, where the compliance effort may yield higher returns.
Importantly, borrowers with loans greater than $2 million that do not satisfy this safe harbor may still have an adequate basis for making the required good-faith certification, based on their individual circumstances in light of the language of the certification and SBA guidance. SBA has previously stated that all PPP loans in excess of $2 million, and other PPP loans as appropriate, will be subject to review by SBA for compliance with program requirements set forth in the PPP Interim Final Rules and in the Borrower Application Form. If SBA determines in the course of its review that a borrower lacked an adequate basis for the required certification concerning the necessity of the loan request, SBA will seek repayment of the outstanding PPP loan balance and will inform the lender that the borrower is not eligible for loan forgiveness. If the borrower repays the loan after receiving notification from SBA, SBA will not pursue administrative enforcement or referrals to other agencies based on its determination with respect to the certification concerning necessity of the loan request. SBA’s determination concerning the certification regarding the necessity of the loan request will not affect SBA’s loan guarantee.
PPP Resumed April 27, 2020
The SBA resumed accepting Paycheck Protection Program applications from participating lenders on Monday, April 27, 2020, after an additional $310 million in funding was approved. Continuing guidance is updated daily at the following sources:
As of the morning of April 16, 2020, the SBA has posted the following notice:
Notice: Lapse in Appropriations
The SBA is currently unable to accept new applications for the Paycheck Protection Program based on available appropriations funding.
The WLJ team will continue to update this information as the situation unfolds.
The White House Releases “Opening Up America Again” Guidelines
The CARES Act
The Senate passed the Coronavirus Aid, Relief, and Economic Security (CARES) Act by a 96-0 vote late Wednesday, March 25. The House passed the measure Friday, March 27, and sent it to President Trump, who has indicated he will sign it into law. The $2.2 trillion relief package will provide loans to small businesses, direct financial checks to many Americans, expanded unemployment insurance and much more. Read NAM’s summary of the key provisions of the bill here.
Small Business Administration Resources
U.S. Department of the Treasury Resources
Assistance for Small Businesses
The Paycheck Protection Program prioritizes millions of Americans employed by small businesses by authorizing up to $349 billion toward job retention and certain other expenses.
Small businesses and eligible nonprofit organizations, Veterans organizations, and Tribal businesses described in the Small Business Act, as well as individuals who are self-employed or are independent contractors, are eligible if they also meet program size standards
- More information (3/31/2020)
- Search Tool: Find an Eligible Lender
- Borrower Application Form (4/2/20)
- Applicable Affiliation Rules
- More information (3/31/2020)
- Lender Application Form (4/2/2020)
- Lender Application Form for Federally Insured Depository Institutions, Federally Insured Credit Unions, and Farm Credit System Institutions (4/3/2020)
- Lender Application Form for Non-Bank and Non-Insured Depository Institution Lenders (4/8/2020)
- Frequently Asked Questions (4/17/2020)
- Interim Final Rule 1 (4/2/2020)
- Interim Final Rule on Applicable Affiliation Rules (4/3/2020)
- Interim Final Rule on Additional Eligibility Criteria and Requirements for Certain Pledges of Loans (4/14/2020)
American Institute of CPAs Coalition Recommends PPP Applicants Use Gross Payroll Approach in Calculations
Federal Reserve Announces Main Street Lending Program
Arkansas has been approved for Small Business Administration (SBA) Disaster Assistance.
Other Federal Legislative Action
Washington, DC’s first legislative effort to combat the COVID-19 outbreak came on March 4, 2020, with the introduction of the Coronavirus Preparedness and Response Supplemental Appropriations Act (H.R. 6074). H.R. 6074, otherwise known as “Phase One,” appropriated $8.3 billion of emergency funding to Federal agencies primarily for coronavirus vaccine research and development, passed overwhelmingly in both houses of congress, and the President signed it into law on March 6, 2020.
The Families First Coronavirus Response Act (H.R. 6201) was introduced on March 11, 2020, and comprises “Phase Two” of the coronavirus relief bills. H.R. 6201 is the $104 billion package focused on paid sick leave, unemployment benefits, and nutrition assistance. On March 13, 2020, the President issued the COVID-19 Outbreak National Emergency Declaration and the following day the U.S. House passed H.R. 6201 overwhelmingly by a margin of 363 to 40. On March 18, 2020, the bill became law after the U.S. Senate passed it overwhelmingly without amendment and sent it on to the President for signature.
H.R. 6201 provides for emergency unemployment benefits for layoffs resulting from COVID-19 and expands the Emergency Family and Medical Leave Act (FMLA) to cover COVID-19-related leave. If the business has 50-500 employees, then those employees who have been employed for at least 30 days have the right to take up to 12 weeks of coronavirus-qualified leave and return to their job. The first two weeks can be unpaid, but the remainder will be paid, which is different from the normal, non-emergency application of the FMLA protected unpaid leave period. The exemption of businesses with less than 50 employees is subject to a yet-to-be-written Secretary of Labor regulation “to exempt small businesses with fewer than 50 employees…when the imposition of such requirements would jeopardize the viability of the business as a going concern” (Section 3102). Therefore, much will depend on what the Labor Department describes as the requirements that “jeopardize” the business’s “viability.”
Employers are entitled to a refundable tax credit equal to up to 100% of the FMLA leave wages paid by the employer for COVID-19-qualified sick leave and emergency leave paid during each calendar quarter of 2020. The tax credit applies to the tax imposed by section 3111(a), i.e., the employer portion (6.2%) of Social Security payroll taxes. For FMLA paid wages, the amount for each employee is limited to 10 days wages at no more than $511 per day, or $5,110 for the year (and $200 per day and $10,000 for the year for those employees who are caring for others). The employer may simply retain the credited amount when making the social security tax payment, and, if the wages paid and credit due exceeds the employer’s total liability under section 3111(a) for all employees for any calendar quarter, the excess credit is entirely refundable to the employer.
In addition to the unemployment benefits and sick leave wages, H.R. 6201 includes nearly a billion dollars for the Secretary of Agriculture to use for emergency nutrition distribution. Specifically, the law appropriates $500 million for women, infants, and children (WIC) and further provides $400 million for the Commodity Assistance Program to distribute emergency food assistance.