On May 5, 2020, the Small Business Administration (“SBA”) and U.S. Treasury Department (“Treasury”) revised their FAQ concerning the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) and the Paycheck Protection Program (“PPP”). Of note, this new guidance clarifies PPP loan forgiveness amount calculations and extends the deadline for PPP borrowers to return loan proceeds.
According to Question 40 of the FAQ, a PPP loan borrower’s forgiveness amount will not be reduced should the company make a good faith attempt, in writing, to re-hire a laid-off employee and the former employee declines the job offer. Again, the borrower must have “made a good faith, written offer of rehire” and the employee’s rejection must be documented. Employees and employers should be aware that in many states, but potentially not all, an employee’s rejection of being re-hired could result in a loss of their unemployment compensation. The SBA and Treasury plan to issue an interim final rule excluding such laid-off employees from the loan forgiveness reduction calculation in the near future.
The guidance also extends the deadline for PPP borrowers to return loan proceeds, the “safe harbor” period, from May 7, 2020, to May 14, 2020. Borrowers need not apply for this extension to have their certification made in good faith. In the coming days, SBA plans to revise their interim final rule regarding this safe harbor deadline and will issue additional guidance on how it will review the certification on the Borrower Application Form.
To access additional resources for businesses navigating the COVID-19 crisis, we invite you to visit PilieroMazza’s COVID-19 Client Resource Center or email us at email@example.com for immediate assistance.