July 7, 2020

Volume X, Number 189

July 07, 2020

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July 06, 2020

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PPP Loan Forgiveness: What the Latest Guidance Means for You

On May 22, the Small Business Administration and the Treasury Department released its latest guidance in the form of two interim final rules on loan forgiveness: “Business Loan Program Temporary Changes; Paycheck Protection Program –Requirements – Loan Forgiveness” and “Business Loan Program Temporary Changes; Paycheck Protection Program – SBA Loan Review Procedures and Related Borrower and Lender Responsibilities.” This, coupled with Treasury’s recent Loan Forgiveness Application gives borrowers seeking forgiveness of their Paycheck Protection Program loans a better understanding of the process, subject to future regulatory or legislative changes.

Forgivable Uses of PPP Loans

The forgivable uses are:

  • You must spend at least 75% of the forgivable amount of your PPP loan on payroll costs

  • Payroll costs for U.S.-resident employees, consist of

    • Salary, wage, commission or similar compensation (up to $100,000 per employee)

    • Cash tips or equivalent

    • Payment for vacation, parental, family, medical, or sick leave (other than qualified family or sick leave wages for which a credit is allowed under Sections 7001 or 7003 of the Families First Coronavirus Response Act) Allowance for dismissal or separation

    • Payment required for the provision of group health care benefits, including insurance premiums

    • Payment of any retirement benefit

    • Payment of state or local tax assessed on the compensation of employees

  • You may not spend more than 25% of the forgivable amount of your PPP loan on nonpayroll costs, consisting of:

    • Payment of interest on a business mortgage obligation for real or personal property entered into prior to Feb. 15, 2020 (but not on principal prepayments or payment of principal),

    • Payments on business rent obligations on real or personal property under a lease agreement in force prior to Feb. 15, 2020

    • Business utility payments (for which service commenced prior to Feb. 15, 2020, consisting of:

      • Electricity

      • Gas

      • Water

      • Transportation (waste removal)

      • Telephone

      • Internet access

Loan Forgiveness Process Generally

A borrower must complete and submit the Loan Forgiveness Application (or its lender’s equivalent) to its lender or the lender servicing its loan.  Bear in mind that your PPP loan may have been sold to another SBA lender, although your original lender may still be the servicer on the loan.  The lender is generally the entity making a determination on your loan forgiveness and has 60 days from the receipt of a complete application to issue a decision to the SBA.  The SBA has 90 days from the date or receipt of the complete loan forgiveness application from the lender, subject to any review of the loan or application, to remit the forgiveness amount to your lender.

©2020 Greenberg Traurig, LLP. All rights reserved. National Law Review, Volume X, Number 155

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About this Author

Lee Ann Anderson GreenBerg Traurig ShareHolder DC NY Capital Markets Corporate Finance Insurance Insurance Regulatory & Transactions
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Lee Ann Anderson focuses her practice on capital markets, structured finance and corporate transactions, with broad experience in U.S. and cross-border securities offerings.

Lee Ann counsels issuers and investment banks on certificates of deposits, including rates-, commodities-, equity-, and proprietary index-linked products. She has wide-ranging experience in debt and equity capital markets, securitizations, and other structured finance transactions. Her practice has included scores of domestic and international debt and equity offerings, as well as securitizations of receivables...

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Carl Fornaris, Greenberg Traurig Law Firm, Miami and Washington DC, Finance and Corporate Law Attorney
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Carl A. Fornaris is an attorney in firm's Financial Regulatory and Compliance Practice. With 24 years of legal experience, Carl advises banks and their holding companies, investment advisers, securities broker dealers, gaming firms, money services businesses and other financial institutions on all aspects of their business. These include  licensing, capital-raising transactions, acquisitions and divestitures, USA PATRIOT Act/BSA/AML compliance and OFAC sanctions programs (including permissible financial activities in Cuba), critical examination reports and enforcement proceedings, Dodd-Frank Act compliance (including Volcker Rule implementation), new products and FATCA. Throughout his career, Carl has counseled clients in their dealings with the Federal Reserve, OCC, FDIC, FinCEN, SEC, FINRA, Florida Office of Financial Regulation, New York Department of Financial Services and other state supervisory authorities.

Carl is also active representing lenders and credit parties in financing transactions, particularly credits to non-U.S. loan parties, asset-based credits, acquisition financing and stand-by letters of credit.

Carl is a past General Counsel of the Florida International Bankers Association and sits on its Board of Directors. Previously, he served as Head of Legal and Compliance for the Latin America region of Barclays Bank PLC, with responsibility for managing legal and compliance matters throughout the region. Carl is an adjunct professor in the Business Law Department of the University of Miami. He began his legal career in Washington, D.C. with an international law firm.

305-579-0626
Barbara Jones, Greenberg Traurig Law Firm, Los Angeles, Private Equity, Corporate and Energy Law Attorney
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Barbara A. Jones is a member of the firm’s Global Securities practice group and co-chairs the firm's Blockchain Task Force. She is also co-coordinator of the firm’s interdisciplinary Conflict Minerals Compliance Initiative. Barbara maintains a diverse corporate and securities law practice across industry groups, emphasizing complex international and domestic transactions, including blockchain/cryptocurrency transactions, private and public financings (including ICOs), dual listings, mergers and acquisitions, strategic collaborations and joint ventures, and licensing...

310-586-7773
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Jennifer S. Zucker is a shareholder in the Washington, D.C. office of Greenberg Traurig. Her practice includes a broad range of litigation, counselling and transactional matters for clients that work with federal, state, and local governments. She represents contractors in bid protests, contract claims and disputes, mergers and acquisitions, False Claims Act matters, and suspension and debarment proceedings. She also counsels contractors on regulatory requirements under government contracts, ethics and compliance issues, and government investigations and audits.

Jennifer’s...

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