Last week, the Small Business Administration (SBA) released a streamlined Paycheck Protection Program (PPP) loan forgiveness application and announced several new guidelines.
AAC member programs in the U.S. that have received or are applying for funding through the PPP, please review the following updates, courtesy of Americans for the Arts (AFTA):
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If you were considering applying for a Paycheck Protection Program forgivable loan, this is your last opportunity; the program will close next week. All new funding applications must be bank approved by June 30, 2020.
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If you were awarded a PPP loan before June 5, 2020, the deadline to reconcile your employee headcount and expenses for forgiveness is June 30, 2020. (Exceptions are made for those who proactively requested a coverage period extension from their financial institution, expanding forgiveness from 8 weeks to 24 weeks.)
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The U.S. Treasury and SBA just released the final PPP Loan Forgiveness Application, which includes the changes to the Paycheck Flexibility Act and EZ Forgiveness Application therefore simplifying the process for eligible borrowers.
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If you anticipate not having 100% of your loan forgiven, you can either return the unused portion or allow it to become a true loan with 1% interest and monthly repayments deferred for at least 6 months. You can also submit a request to your bank to extend the maturity of the loan from 2 years to 5 years based on the newly enacted Paycheck Flexibility Act.
- You may be exempted from a loan forgiveness reduction, arising from a proportional reduction in FTE employees, if you can certify you could not return to a normal level of business activity due to your compliance with CDC and other health agency mandates. [ read more below ]
For more information about PPP grants and loan forgiveness, visit the SBA’s overview page and watch the recorded AFTA webinar “Guidance and Q&A on the Newly Released Paycheck Protection Loan Forgiveness Application Forms and Flexibility Rules." Or take part in AFTA’s “Office Hours with Nina” this Wednesday or Friday, 11am-12pm ET.
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Update: The Treasury released the following interim rule which explains how loan forgiveness may be offered to borrowers even if they have had a reduction in FTE if they are able to certify in good faith that they could not return to their normal level of business activity due to complaince with CDC and health adminstration guidelines:
Borrowers are exempted from the loan forgiveness reduction arising from a proportional reduction in FTE employees during the covered period if the borrower is able to document in good faith the following: (1) an inability to rehire individuals who were employees of the borrower on February 15, 2020; and (2) an inability to hire similarly qualified individuals for unfilled positions on or before December 31, 2020. Borrowers are required to inform the applicable state unemployment insurance office of any employee’s rejected rehire offer within 30 days of the employee’s rejection of the offer.7 The documents that borrowers should maintain to show compliance with this exemption include, but are not limited to, the written offer to rehire an individual, a written record of the offer’s rejection, and a written record of efforts to hire a similarly qualified individual.
Borrowers are also exempted from the loan forgiveness reduction arising from a reduction in the number of FTE employees during the covered period if the borrower is able to document in good faith an inability to return to the same level of business activity as the borrower was operating at before February 15, 2020, due to compliance with requirements established or guidance issued between March 1, 2020 and December 31, 2020 by the Secretary of Health and Human Services, the Director of the Centers for Disease Control and Prevention (CDC), or the Occupational Safety and Health Administration related to the maintenance of standards for sanitation, social distancing, or any other worker or customer safety requirement related to COVID-19 (COVID Requirements or Guidance). Specifically, borrowers that can certify that they have documented in good faith that their reduction in business activity during the covered period stems directly or indirectly from compliance with such COVID Requirements or Guidance are exempt from any reduction in their forgiveness amount stemming from a reduction in FTE employees during the covered period. Such documentation must include copies of applicable COVID Requirements or Guidance for each business location and relevant borrower financial records.
The Administrator, in consultation with the Secretary, is interpreting the above statutory exemption to include both direct and indirect compliance with COVID Requirements or Guidance, because a significant amount of the reduction in business activity stemming from COVID Requirements or Guidance is the result of state and local government shutdown orders that are based in part on guidance from the three federal agencies
Read full Interim Rule.