Further Guidance on PPP Loan Forgiveness

SBA and Treasury Release Further Guidance on PPP Loan Forgiveness
However, Congress Could Act to Overhaul the Program, Possibly As Soon As This Week

Late last Friday, the Small Business Administration (SBA) and U.S. Department of the Treasury released long-awaited guidance on how loans obtained through the Paycheck Protection Program (PPP) can be forgiven. Two new interim final rules – one addressing requirements for loan forgiveness, the second outlining loan review procedures and borrower and lender responsibilities – build on the application form and instructions released by SBA/Treasury on May 15th.

Unfortunately, the two interim rules do not address concerns from numerous business groups, who have been advocating for more time to use the loans (rather than the current eight weeks) and more freedom to spend the money as they choose, rather than the current mandate that 75% be spent on payroll costs. Critics say that these provisions do not do enough to accommodate workplaces that are affected by government-imposed business closures and/or stay-at-home orders that keep businesses closed or operating at greatly reduced capacity.

However, Congress is considering a major overhaul of the program, with possible legislation giving employers additional time to spend the funds (possibly up to 24 weeks) and more flexibility to cover non-payroll expenses, being considered. The Trump administration has also signaled that they are supportive of a congressional fix allowing borrowers more time to spend PPP funds, but their position on altering the 75% rule is not as clear.

Relevant highlights of the guidance released Friday include:

Loan forgiveness available for owner-employees and self-employed individuals’ own payroll compensation is capped at the lesser of 8/52 of 2019 compensation or $15,385 per individual in total.
No additional forgiveness for is available to self-employed individuals (including Schedule C filers and general partners) for retirement or health insurance contributions.
Advance payments on mortgage interest are not eligible for loan forgiveness.
PPP loan borrowers are required to notify the state unemployment office within 30 days of an employee’s rejected offer to return to work.
Bonuses, hazard pay, and payments (salary, wages, and commissions) to furloughed employees are eligible for loan forgiveness.
SBA can review any loan, regardless of size, for borrower eligibility, loan amount and use of proceeds, and loan forgiveness amounts. This review can be undertaken at any time at the SBA’s discretion.

As of May 23rd, SBA had issued more than 113,000 loans to Michigan businesses, for a total of more than $15 billion. It is estimated that there is still more than $100 billion in PPP funds available to lend.

The MAC continues to review the guidance issued Friday and will update our Frequently Asked Questions document on PPP loan forgiveness as appropriate. We will also monitor the situation in Congress and inform the membership as new information becomes available.

Reminder: Spring Virtual Convention Attendees – June 1st is Fast Approaching!
Webinars Featuring Dr. Heidi Haavik (4 Hours), Dr. Francis Murphy (4 Hours), Dr. Evan Gwilliam (2 Hours), and Attorney Pay Meyn (2 Hours) Still Available

Just a reminder for those of you who have registered for and participated in the MAC Spring 2020 Virtual Convention: The deadline for completion of all continuing education hours associated with this event is Monday, June 1. After June 1st, you can no longer access these courses through the virtual convention.

If you have not registered, but would like to, you can still get up to 12 hours of continuing education, including the State of Michigan requirements of one hour in ethics, one hour in sexual boundaries, and one hour in pain and symptom management.

Click here for more information or to register.