Extension of Time to Repay PPP Loans
Seemingly, the SBA and Treasury are aware that many borrowers are concerned about the required certification needed for a PPP Loan to support ongoing business operations. On April 23, 2020, new standards for that certification were released. Under these new rules, borrowers had to certify in good faith that current economic uncertainty made the loan request necessary to support ongoing operations, taking into account, “their current business activity and their ability to access other sources of liquidity sufficient to support their ongoing operations in a manner that was not significantly detrimental to the business.” Borrowers who applied for a loan before April 24, 2020, and may have misunderstood or misapplied the certification rules were given until May 7, 2020, to repay the loan. That deadline is now extended to May 14, 2020. Prior to that time, the SBA and Treasury will be providing additional guidance on how it will review borrower’s certification in future audits.
New Rules Regarding Foreign Employees
In less favorable guidance, the SBA and Treasury clarified that employees of foreign affiliates need to be included in determining whether the 500 or fewer employee size standard is meet. While it was always understood that employees of all affiliated entities needed to be considered, in previously released Interim Final Regulations, the 500 or fewer employee size standard only counted employees whose principal residence was located in the United States. Thus, borrowers did not have to consider the employees whose principal place of residence was outside the United States, including the employees of foreign affiliates. There is no transitional rule provided for borrowers who applied for a PPP Loan and may not now qualify to make such an application. Borrowers who determine that they do not qualify for a PPP Loan under the new guidance should repay the loan promptly.
SBA Loan AssistanceCherry Bekaert is pleased to offer two levels of assistance with the SBA loan application process, as well as PPP loan forgiveness claim consulting and documentation assistance.