Insight

Special Alert | Paycheck Protection Program

New rules, guidance, and forms released

Amy S. Matsuo

Amy S. Matsuo

National Leader, Regulatory Insights, KPMG US

+1 919-244-0266

The SBA and Treasury released updated rules, guidance, and forms reflecting amendments to the Paycheck Protection Program (PPP) brought about by the Paycheck Protection Program Flexibility Act, which was signed into law on June 5, 2020. The new releases include a(n):

Changes will also be required to the PPP Loan Forgiveness Application (SBA Form 3508) though an updated version has not yet been released. The interim final rule makes change to the SBA’s “First Interim Final Rule” released on April 2, 2020. Highlights of the changes and the areas they address include:

Maturity

  • For loans made before June 5, 2020, the loan maturity remains two years but borrowers and lenders may mutually agree to extend the maturity of the loan to five years. For loans made after June 5, 2020, the loan maturity is five years.

Deferral

  • Payments of principal and interest will not be required before the date on which the SBA remits the loan forgiveness amount to the lender or notifies the lender that no loan forgiveness is allowed, provided the loan forgiveness application is submitted to the lender within 10 months after the end of the “loan forgiveness covered period.”
  • The “loan forgiveness covered period” is the 24-week period beginning on the date the PPP loan is disbursed. For loans made before June 5, 2020, the borrower may elect an 8-week period beginning on the date the PPP loan was disbursed.
    • Lenders must notify borrowers of the SBA’s remittance of the loan forgiveness amount, or that no forgiveness is allowed, and the date the first payment is due.
    • If a borrower does not submit the loan forgiveness application within 10 months after the end of the loan forgiveness covered period, principal and interest payments must begin after that period.

Loan forgiveness

SBA will be issuing revisions to its interim final rules on loan forgiveness and loan review procedures to address amendments to the loan forgiveness requirements. SBA will also be issuing additional guidance on advance purchases of PPP loans.

  • The Administrator will interpret the 60 percent requirement as a proportional limit on non-payroll costs as a share of the borrower’s loan forgiveness amount and not as a threshold for receiving any loan forgiveness.

Borrower certifications

  • Documentation verifying the number of full-time equivalent employees on payroll as well as the dollar amount of payroll costs, covered mortgage interest payments, covered rent payments, and covered utilities for the loan forgiveness covered period for the loan will be provided to the lender.
  • Loan forgiveness will be provided for the sum of documented payroll costs, covered mortgage interest payments, covered rent payments, and covered utility payments.

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