Over the weekend, the SBA issued two interim rules regarding PPP loan forgiveness. 

The first rule , which can be found HERE , provides guidance to borrowers on the loan forgiveness process, including the timing from the submission of the loan forgiveness application ( OUR PRIOR E-ALERT WITH APPLICATION FOUND HERE ) to payment. The rule also answers a few frequently asked questions regarding how to calculate the amount of loan forgiveness, including what costs are and are not eligible. For example, salary and wages paid to furloughed employees, as well as hazard pay and bonuses, may be forgivable as payroll costs. Advanced payments on mortgages, however, are not. 

The rule also provides clarity on calculating loan forgiveness reductions. It states that employers, with adequate documentation, will not be penalized for (1) employees who are provided a good faith written offer of rehire to the same position but refuse to return; or (2) employees who are fired for cause, voluntarily resign, or voluntarily request a reduced schedule. The rule also provides additional guidance for calculating full-time equivalent (“FTE”) employees and clarifies that employers will not be doubly penalized for salary and wage reductions attributable to FTE reductions.

The second rule , which can be found HERE , provides guidance on the SBA’s review process of a PPP loan application and loan forgiveness. It sets forth the procedure by which the SBA may review a borrower’s file, and clarifies that the borrower will have an opportunity to respond to any inquiry. Procedures for appeals of any SBA decision will be forthcoming. The SBA further states that it can undertake a review of any file at any time, and that borrowers should retain their PPP-related documents for six years.
If you have any questions relating to this eAlert, or any other COVID-19 issue, please contact NFC's COVID-19 Response Team as we are closely monitoring the rapidly changing legal landscape relating to this global pandemic. Please feel free to reach out to the NFC Attorney you typically work with or call us at 973.665.9100.  
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