PPP Loan Forgiveness Update

//PPP Loan Forgiveness Update

PPP Loan Forgiveness Update

Yesterday, the SBA updated its Frequently Asked Questions offering guidance on, among other things, whether a business will be subject to a reduction in PPP loan forgiveness if the business attempts to rehire its employees but one or more employees declines to return to work.

Here is the relevant Q and A (Question and Answer 40) which will be of interest to many of you:

Question: Will a borrower’s PPP loan forgiveness amount (pursuant to section 1106 of the CARES Act and SBA’s implementing rules and guidance) be reduced if the borrower laid off an employee, offered to rehire the same employee, but the employee declined the offer?

Answer: No. As an exercise of the Administrator’s and the Secretary’s authority under Section 1106(d)(6) of the CARES Act to prescribe regulations granting de minimis exemptions from the Act’s limits on loan forgiveness, SBA and Treasury intend to issue an interim final rule excluding laid-off employees whom the borrower offered to rehire (for the same salary/wages and same number of hours) from the CARES Act’s loan forgiveness reduction calculation. The interim final rule will specify that, to qualify for this exception, the borrower must have made a good faith, written offer of rehire, and the employee’s rejection of that offer must be documented by the borrower. Employees and employers should be aware that employees who reject offers of re-employment may forfeit eligibility for continued unemployment compensation.

 

The FAQs and other guidance from the SBA (which is regularly updated) can be found here: https://home.treasury.gov/policy-issues/cares/assistance-for-small-businessess

The full text of the updated FAQs is here:  (Questions 40-42 were published yesterday.) https://home.treasury.gov/system/files/136/Paycheck-Protection-Program-Frequently-Asked-Questions.pdf

We are still waiting on the SBA Interim Final Rules with more guidance on loan forgiveness.

Should you have any questions as you navigate, please don’t hesitate to reach out to your Archstone attorney.

2020-05-04T12:35:16-04:00May 4th, 2020|News|