The Small Business Administration (SBA) issued an interim final rule to supplement previously posted interim final rules on the Paycheck Protection Program (PPP) with additional guidance on nondiscrimination obligations and additional eligibility requirements for higher education institutions. In addition, SBA recently updated Frequently Asked Questions (FAQs) about PPP for lenders and borrowers.
The interim final rule intends to alleviate concerns that nonprofits would have to substantially change their options in order to participate in PPP. It clarifies that nonprofits that apply and receive loans and loan forgiveness under the PPP must meet their nondiscrimination obligations under current law. Specifically, recipients of PPP loans are entitled to exemptions allowed under current law regarding “sex-specific admissions practices, sex-specific domestic violence shelters, coreligionist housing, or Indian tribal preferences in connection with adoption or foster care practices.”
The interim final rule clarifies that religious nonprofit entities are allowed to make hiring decisions based on their religious beliefs with respect to all activities performed by the nonprofit.
Student Workers and PPP Loan Eligibility
The interim final rule requires higher education institutions to exclude work study students and their payroll costs for the purposes of determining the number of employees for PPP loan eligibility and PPP loan amount.
The interim final rule is effective May 8, 2020 (i.e., the scheduled date of publication in the Federal Register). Public comments are due 30 days after publication (i.e., on or around June 7, 2020).
Below are upcoming comment deadlines for previously issued interim final rules on PPP:
- 85 FR 20811 provides formal guidance on implementation for borrowers and lenders regarding eligibility, use of PPP loans, loan forgiveness, and other terms and conditions. Comments are due May 15, 2020 (WHG summary).
- 85 FR 20817 provides additional guidance on how affiliates will be considered together for the purposes of determining eligibility. See SBA’s fact sheet on four tests for affiliation. Comments are due May 15, 2020.
- 85 FR 21747 provides additional guidance regarding eligibility for individuals with self-employment income and certain businesses. Comments are due May 20, 2020 (WHG summary).
- 85 FR 23450 provides additional guidance regarding promissory notes, authorizations, affiliation, and eligibility. Comments are due May 28, 2020 (WHG summary).
- 85 FR 23917 authorizes eligible lenders to use alternative criteria to calculate the maximum loan amount for PPP loans. Comments are due May 30, 2020 (WHG summary).
- 85 FR 26321 clarifies that a lender must fully disburse a PPP loan within 10 calendar days of loan approval. Comments are due June 3, 2020 (WHG summary).
- 85 FR 26324 provides guidance amount of PPP loans that any single corporate group may receive and criteria for non-bank lender participation in the PPP. Comments are due June 3, 2020 (WHG summary).