Apr 03 2020

Late in the evening on April 2, the SBA issued an Interim Final Rule on the PPP (the April 2 Rule) and published a revised Application form (Revised Application).  While SBA and Treasury continue to say that loans will be provided today, April 3, many banks will need time to digest this additional guidance from SBA and stand up their process for accepting applications and issuing PPP loans. 

A few highlights of the April 2 Rule and Revised Application: 

  1. Interest Rate = 1%:  The CARES Act originally provided for a maximum interest rate of 4%; the earlier guidance provided for a 0.5% interest rate and the April 2 Rule provides for 1% interest rate for any amounts not forgiven under the PPP.  
  2. Required Documentation:  The April 2 Rule clarified that only the Revised Application, payroll documentation and Know Your Customer documentation (if not already on file with the lender) are required.
  3. Affiliation Rules:  The April 2 Rule did not provide any new guidance on the affiliation rules, but the SBA did say in the April 2 Rule that it intends to promptly issue additional guidance with regard to the applicability of affiliation rules.    We continue to monitor this issue as described in our Client Alert from yesterday which is set out in full below.
  4. Payroll Calculation Period:  Confusion remains about how to calculate average monthly payroll as the April 2 Rule provided that payroll is calculated for the last 12 months, while the Revised Application continues to advise that payroll is calculated for 2019.
  5. Independent Contractors:  The April 2 Rule made clear that independent contractors of an applicant should not count for purposes of number of employees or be included in payroll numbers. 
  6. Signatories on Revised Application:  The Revised Application does not require that 20%+ owners sign the Revised Application, like the prior Application did. An authorized representative of the business must sign.  

We continue to field many specific questions from our clients on the PPP and are here to help.