The Small Business Administration (SBA) issued an interim final rule to supplement previously posted interim final rules (85 FR 20811; 85 FR 20817; and 85 FR 21747) on the Paycheck Protection Program (PPP) with additional guidance regarding promissory notes, authorizations, affiliation, and eligibility.
Of note, the latest interim final rule allows certain public hospitals to apply for PPP loans. Specifically, “a hospital that that is otherwise eligible to receive a PPP loan as a business concern or nonprofit organization (described in section 501(c)(3) of the Internal Revenue Code of 1986 and exempt from taxation under section 501(a) of such Code) shall not be rendered ineligible for a PPP loan due to ownership by a state or local government if the hospital receives less than 50% of its funding from state or local government sources, exclusive of Medicaid.”
In addition, the interim final rule clarifies that a business or organization involved in a bankruptcy proceeding, “either at the time it submits the application or any time before the loan is disbursed,” is not eligible to receive a PPP loan.
The interim final rule is effective April 28, 2020 (i.e., date of publication in the Federal Register). Public comments are due on May 28, 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).
The most recent coronavirus package – the Paycheck Protection Program and Health Care Enhancement Act (Pub. L. 116-139) – signed into law on April 24, 2020 provides PPP with an additional $310 billion (WHG summary). On April 27, SBA resumed accepting PPP applications from eligible lenders. PPP loans are available through June 30, 2020, subject to funding.