04-03-2020 | Blogs, Business Transactions, BW News

Interim Final Rule Issued for Paycheck Protection Program April 3, 2020

By: Ellen Hames


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On April 3, 2020, the U.S. Small Business Administration issued an Interim Final Rule regarding the Paycheck Protection Program, accessible here: https://content.sba.gov/sites/default/files/2020-04/PPP–IFRN%20FINAL.pdf (the “Rules”).  These Rules implement the Paycheck Protection Program sections (sections 1102 and 1106) of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), which provides loans to eligible small businesses nationwide. For detailed information on the Paycheck Protection Program please see our previous blog post here – What do I do if I am ready to apply for a Paycheck Protection Program loan from the SBA?

The Rules issued April 3 generally outline the information already provided in the Paycheck Protection Program sections of the CARES Act.  Based on the questions we have received directly, odds are that the Rules do not address your specific questions on the Paycheck Protection Program. Submitting official comments may help address these gaps.  Send any comments and questions you have on the program to any attorney you work with at BrownWinick, and we are happy to prepare comments to be formally submitted.

There are a couple of changes made by the Rules:
  • The interest rate of the loans under the PPP is now changed to 1%.
  • The maturity date on a PPP loan is now two years.
  • Clarity that each eligible borrower may only receive one PPP loan.
  • Clarity that loans will be able to be deferred for six months, meaning that you will not have to make any payments for six months following the date of disbursement of the loan (though interest will continue to accrue on PPP loans during this six-month deferment).
  • Clarity that not more than 25 percent of the loan forgiveness amount may be attributable to non-payroll costs.

The Rules also provide some helpful guidance, for example on how to calculate the loan amount an entity may borrow (See Section III(2)(e) beginning on page 8 of the Rules), and suggest that further guidance will be coming from the SBA.

The SBA is also available to assist with guidance on the Paycheck Protection Program – via the Lender Relations Specialist in your local SBA Field Office.  SBA Field Office information is found here: https://www.sba.gov/tools/local-assistance/districtoffices. The Iowa District Office is located in Des Moines and may be reached at 515-284-4422.

If you have any questions please reach out to your BrownWinick attorney or submit a message through our Contact Us form.

For updates on COVID-19 and new guidance provided by BrownWinick attorneys, please visit our COVID-19 Resource Page.