The Small Business Administration (SBA), in consultation with the Department of the Treasury, released the Paycheck Protection Program (PPP) Loan Forgiveness Interim Final Rules on May 22, 2020 which describes the loan forgiveness process and lenders’ and borrowers’ responsibilities.

Interim Final Rule on Loan Forgiveness (5-22-20)

Interim Final Rule on SBA Loan Review Procedures and Related Borrower and Lender Responsibilities 5-22-20

The new guidance includes:

  • Paid and incurred discussion and examples for payroll and non-payroll costs
  • Discussion on paying bonuses, incentives and hazard pay to employees
  • Detail with respect to the timing of payroll costs and how the new ‘Alternative Covered Period’ will work
  • FTE and wage reduction discussion, including examples
  • Provided some new specificity and clarity to three categories that are countable to determine the total amount forgiven including interest, rent and utilities
  • Advance payments of interest are not eligible for loan forgiveness
  • Outlines the loan forgiveness process

This interim final rule supplements previous regulations and guidance on the issues related to loan forgiveness.

By providing a high degree of certainty to PPP borrowers through this interim final rule, PPP borrowers will be able to take immediate steps to maximize their loan forgiveness amounts, for example, by either rehiring employees or not laying off employees during the covered period. This rule is being issued to allow for immediate implementation of the forgiveness component of this program.

Lenders must report their decisions on forgiveness applications to SBA within 60 days of receiving a complete application and must provide supporting documentation for their decisions.

Questions on how this impacts your business? Call one of our experts at (888) 388-1040.

Last updated: May 26, 2020 at 3 pm.