PPP Updates: Borrower Details Released, Application Extension & Revisions to Forgiveness Application Timing
Borrower Details Released
On July 6, 2020, the Small Business Administration (SBA) and the U.S. Treasury released detailed and searchable information about more than 650,000 borrowers that received PPP loans. As the SBA previously announced, for loans below $150,000, the names of borrowers were not released, but totals for those borrowers were provided by zip code, industry and business type.
For loans of more than $150,000, the loan range, names, addresses, NAICS codes, business types, demographic information (if provided by the borrower), nonprofit status, jobs retained, date approved, lender name and congressional district were provided. Instead of identifying specific loan amounts for each borrower, the data is arranged in buckets ranging from $150,000 to $350,000; $350,000 to $1 million; $1 million to $2 million; $2 million to $5 million; and $5 million to $10 million.
The SBA and U.S. Treasury also noted that cancelled (or returned) loans were not included in this public release of data.
Now that this information has been released, we suggest any concerned borrowers be prepared to answer questions from the press and other interested parties about whether they met eligibility requirements, why they needed a loan and how they used the loan proceeds.
PPP Applications Extended Until August 8, 2020
On July 4, 2020, President Trump signed into law an extension of the Paycheck Protection Program (PPP), which extends the period in which businesses may apply for a PPP loan until August 8, 2020. The program previously expired on June 30, but in a surprise move last week, the Senate and House both unanimously approved this extension giving potential borrowers more time to access the program under the existing terms. Approximately $130 billion in funding remains.
Updates on Forgiveness
The SBA and U.S. Treasury continue to clarify the PPP forgiveness process in light of the passage of the Paycheck Protection Program Flexibility Act of 2020 (as described here).
One recent clarification was that a borrower may apply for forgiveness any time on or before the maturity date of its loan – including prior to the end of its applicable covered period – if the borrower has used all the loan proceeds for which it is requesting forgiveness.
Borrowers that choose to apply for forgiveness prior to the end of their applicable covered period and who have reduced salaries or hourly wages for employees in excess of 25% must calculate such reductions for the full length of the covered period. The reduction based on the number of full-time employees will be based on the number of full-time employees as of the date of the forgiveness application. Therefore, borrowers should be careful about choosing the date for applying for forgiveness that provides the maximum forgiveness amount based on their individual circumstances.
If a borrower does not apply for loan forgiveness within ten months after the last day of the covered period, or if the SBA determines that the loan is not eligible for forgiveness (in whole or in part), the borrower must begin paying principal and interest. If this occurs, the lender must notify the borrower of the date the first payment is due.
New Relief on the Horizon
Congress has indicated that an additional coronavirus relief package will be considered in mid-to-late July. We continue to monitor potential new relief programs that Congress is considering and will provide additional updates going forward.