Crux of the Matter Blog

Second Update: Paycheck Protection Program Small Business Guidance

by G. Wythe Michael
The US Small Business Administration Treasury Department released an “Interim Final Rule” on Thursday April 2, 2020 with additional guidance on the Paycheck Protection Program. Summarized below are the changes to prior guidance. For additional detail and summary of the Paycheck Protection Program please see our previous posts on March 27 and April 1. Please contact us if you have questions regarding this program or any of the other provisions contained in the Act.
The new rule from the SBA contains the following details:
  • Applications should be made on SBA Form 2483. Applications will be submitted electronically to lenders participating under the program.
  • In a big change, payments made to independent contractors do not count toward payroll. According to the rule, this is because independent contractors have the ability to apply for a PPP loan on their own so they do not count for purposes of a borrower’s PPP loan calculation.
  • Another big change was made to the forgiveness calculation. Now, rent and utilities (the non-payroll portion of the forgivable loan amount) are limited to 25% of the total forgiveness amount. Said another way, payroll paid in the 8 week period following loan closing must account for 75% of the amount forgiven.
  • The new rule changes the interest rate on loans made under the program from 0.5% to 1%. This is the second change to interest rates; the CARES Act indicated that the interest rate could be up to 4%.
  • Applications may be made to any existing SBA lender or through any federally insured depository institution, federally insured credit union, and Farm Credit System institution that is participating.

    It appears the other major loan program terms are the same.

    As mentioned previously, we recommend that you work with your current lender if possible as most lenders we have talked to will be prioritizing their current customers. We also recommend that borrowers carefully assess their expected payroll over the 8 week period following the loan and only borrow an amount that is likely to be forgiven (8 week payroll plus rent and utility payments up to an additional 25% of the total amount forgiven).

    This summary contains a general, condensed summary of the most recently available version of the CARES Act for information purposes. It is not meant to be and should not be construed as legal advice. Readers with particular needs on specific issues should retain the services of competent counsel.

Share
Published by
Goodman Allen Donnelly
5 years ago

Related Post

  • Military spouse attorney ‘lucks’ into medical malpractice law work and loves it
  • Mandatory Off-Cycle Provider Revalidation Forms for Skilled Nursing Facilities Will Require Cooperation by SNF Owners, Operators and Many Suppliers
  • What to Do When You’re All Done: How to Close Up Shop and Get Out of the Game

    • Recent Posts

    Military spouse attorney ‘lucks’ into medical malpractice law work and loves it

    Military spouse attorney ‘lucks’ into medical malpractice law work and loves it By Brian Cox…

    1 month ago

    Mandatory Off-Cycle Provider Revalidation Forms for Skilled Nursing Facilities Will Require Cooperation by SNF Owners, Operators and Many Suppliers

    CMS is mandating all skilled nursing facilities (SNFs) to complete an off-cycle revalidation using a…

    2 months ago

    What to Do When You’re All Done: How to Close Up Shop and Get Out of the Game

    In her article for Hampton Roads Physician magazine, What to Do When You’re All Done:…

    2 months ago

    Thea Pitzen Publishes “Is This Thing On?” to Hampton Roads Physician

    Healthcare attorney, Thea Pitzen wrote “Is This Thing On?” an article advising physicians about the…

    4 months ago

    Final Rule Update to Section 504 of Rehabilitation Act of 1973 Strengthens Protections Against Discrimination on the Basis of Disability

    Overview of Section 504 On May 9, 2024, the Department of Health and Human Services…

    4 months ago

    New Nondiscrimination Requirement in Long Term Care Facilities and other Health Programs under Section 1557 Final Rule

    New Nondiscrimination Requirement in Long Term Care Facilities and other Health Programs under Section 1557…

    6 months ago