As mentioned in our most recent blog post detailing the employer-related provisions of the CARES act, employers can begin applying for the Paycheck Protection Program (PPP) today, April 3, 2020.

Last night, the Small Business Administration (SBA) issued interim final rules (IFR) regarding the program, and further revised the PPP loan application to eliminate some of the language that was problematic for those seeking a PPP loan.

Specifically, the prior version of the PPP loan application required each applicant to attest that they had provided tax information to the lender for purposes of determining loan eligibility and amount and that the tax information provided was identical to that provided to the IRS. For small businesses utilizing PEO services, some of the required documentation, like tax Form 941 are held by the PEO itself.

The loan application was revised to now read as follows:

I acknowledge that the lender will confirm the eligible loan amount using required documents submitted. I understand, acknowledge and agree that the Lender can share any tax information that I provided with SBA’s authorized representatives, including authorized representatives of the SBA Office of Inspector General, for the purpose of compliance with SBA Loan Program Requirements and all SBA reviews.

The new language clarifies that lenders can confirm the eligible loan amount using documents such as payroll records and bank statements, and that tax documents (such as Forms 941) are not required to be provided to lenders to qualify for the loans.

HOW TO APPLY

PPP loans are first come first served, until the $349 billion appropriated for this purpose has been completely distributed. Small businesses should call their current bank or lender directly, to indicate interest in the loan and be directed to the application. All of the 1,800 banks that currently participate in the SBA’s Section 7(a) loan program are expected to participate in the PPP as well. To account for the increased need of assistance, the Treasury Department is planning to approve additional lenders in the coming weeks. The SBA has also provided a list of all of the most active Section 7(a) lenders, updated at the beginning of this quarter.

While the new language states that tax forms are not required, PEO clients can use this letter to explain the PEO relationship to their lender when submitting their documents.

LOAN FORGIVENESS

Employers should keep in mind that while these loans are intended for immediate relief to the business, how the money is used can affect how much of the loan must be paid back. Repayment is deferred for six months and will have an interest rate beginning at 1 percent. The maximum term of repayment is two years.

The PPP loan can be completely forgiven if the business retains their entire workforce or if they rehire workers by June 30, 2020. The forgiveness amount will be subsequently reduced if the business lays off workers and does not rehire them, reduces the wages it pays out to a worker by more than 25 percent, and/or uses the loan for costs that are not approved by the bill.

For more guidance on the best way to use PPP loan funds, reach out to your HR Representative.

Have an HR Question?

If you have any questions about this article or HR Outsourcing & PEO in general, let us know:

About Emplicity:
Since 1995, Emplicity has provided a smarter, more secure, and integrated platform of employer services to its 300 business clients and their 8,500 employees. As a Professional Employer Organization, or PEO, the California-based HR outsourcing firm simplifies the compliance, administration, and support businesses need in the areas of employee benefits, payroll, and human resources technology.

For more information about us, visit www.emplicity.com or call us at (877) 476-2339. We’d love to make your employee management more simple—and secure.

NOTICE: Emplicity provides HR advice and recommendations. Information provided by Emplicity is not intended as a substitute for employment law counsel. At no time will Emplicity have the authority or right to make decisions on behalf of its clients.

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