SBA Releases Interim Final Rule on Loan Forgiveness for PPP

COVID-19 , PPP ,

Source: Aprio, LLP

On May 23, 2020, the Small Business Administration (SBA), in consultation with the Treasury, issued an interim final rule titled Paycheck Protection Program – Requirements – Loan Forgiveness.

The interim final rule follows the Loan Forgiveness Application released on May 15, 2020 and reiterates the key changes identified within the application. As referenced in our article published on May 16, 2020, SBA Releases Forgiveness Application Resulting in BIG Changes to PPP, key changes include:

  • Payroll costs and non-payroll costs paid OR incurred are generally eligible for forgiveness
  • Availability of an alternative payroll covered period
  • A full-time equivalent employee means an employee who works 40 hours or more, on average, each week
  • The salary/hourly wage reduction is determined on an individual employee basis
  • A safe harbor is provided to allow borrowers to avoid a reduction in forgiveness based on a reduction in FTEs or a reduction in salary/hourly wage in excess of 25%
  • Borrowers can receive exceptions to the FTE reduction provision