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 eligibility requirements relating to applicants with past felony convictions.
SBA shortens the timeframe under review from five years to one year for an applicant that has been convicted of a felony that does not involve fraud, bribery, embezzlement, or a false statement in a loan application. Specifically, an applicant is ineligible for a PPP loan if “an owner of 20 percent or more of the equity of the applicant” has been convicted of a felony involving fraud, bribery, embezzlement, or a false statement in a loan application or an application for federal financial assistance within the last five years or any other felony within the last year.
These interim final rules will take effect on June 1, 2020 (i.e., the scheduled date of publication in the Federal Register). Comments are due 30 days after publication (i.e., on or around July 1, 2020).
Below are previously issued interim final rules on PPP and upcoming comment deadlines:
- 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 were 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 were due May 15, 2020.
- 85 FR 21747 provides additional guidance regarding eligibility for individuals with self-employment income and certain businesses. Comments were due May 20, 2020 (WHG summary).
- 85 FR 23450 provides additional guidance regarding promissory notes, authorizations, affiliation, and eligibility. Comments were 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 were 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 were due June 3, 2020 (WHG summary).
- 85 FR 27287 provides additional guidance on nondiscrimination obligations and additional eligibility requirements for higher education institutions. Comments were due June 8, 2020 (WHG summary).
- 85 FR 29842 provides additional guidance clarifying that PPP loans may be increased for approved partnerships and seasonal employers based on revised calculations. Comments were due June 18, 2020 (WHG summary).
- 85 FR 29845 extends the deadline for lenders to submit the SBA Form 1502 (which collects payment and loan information) from May 18, 2020 to May 22, 2020. Note: The interim final rule released today extends the deadline to May 29, 2020. Comments were due June 18, 2020 (WHG summary).
- 85 FR 29847 states electric cooperatives that are exempt from Federal income taxation will be eligible for a PPP loan. Comments are due June 18, 2020 (WHG summary).
- 85 FR 31357 extends the limited safe harbor with respect to certification concerning need for a PPP loan request from May 14, 2020 to May 18, 2020. Comments are due June 25, 2020 (WHG summary).
- 85 FR 33004 provides additional guidance on additional guidance on loan forgiveness and loan review procedures and related borrower and lender responsibilities. Comments are due July 1, 2020.
Lastly, Frequently Asked Questions for lenders and borrowers (last updated May 27, 2020) are available here.