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SBA and Treasury Issue Guidance on Revived PPP

Late Wednesday, the Small Business Administration and the Department of the Treasury issued new guidance on the recently revived Paycheck Protection Program. Here is what you need to know.
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sba and treasury issue guidance on revived paycheck protection program (ppp)

Late Wednesday, the Small Business Administration (SBA) and the Department of the Treasury issued new guidance on the recently revived Paycheck Protection Program (PPP). The guidance came in the form of two interim final rules (IFR) and a document on accessing capital for minority, underserved, veteran and women-owned business concerns.

The first IFR, “Business Loan Program Temporary Changes; Paycheck Protection Program as Amended," consolidates the rules for PPP forgivable loans for first-time borrowers and outlines changes made by the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act.

Regarding eligibility for 501(c)6 organizations, while the Big “I" continues to seek clarity on the matter (see a recent letter sent to the SBA and Treasury), the document remains vague and does not provide much more information than what is already in law. It notes:

viii. Are 501(c)(6) organizations eligible for PPP loans?

Yes. Any organization that is described in section 501(c)(6) of the Internal Revenue Code and that is exempt from taxation under section 501(a) of such Code (excluding professional sports leagues and organizations with the purpose of promoting or participating in a political campaign or other activity) shall be eligible to receive a PPP loan as long as other eligibility requirements are met and if: (1) the organization does not receive more than 15 percent of its receipts from lobbying activities; (2) the lobbying activities of the organization do not comprise more than 15 percent of the total activities of the organization; (3) the cost of the lobbying activities of the organization did not exceed $1,000,000 during the most recent tax year of the organization that ended prior to February 15, 2020; and (4) the organization employs not more than 300 employees.

The second IFR released, “Business Loan Program Temporary Changes; Paycheck Protection Program Second Draw Loans," lays out the guidelines for new PPP loans to businesses that previously received a PPP loan. The document notes that these second draw PPP Loans are generally subject to the same terms, conditions and requirements as first draw PPP loans.

The IFR then makes clear some of the additional requirements including that the law generally provides that a borrower is eligible for a second draw PPP loan only if it has 300 or fewer employees and experienced a revenue reduction of 25% or greater in any three-month period in 2020 relative to the same quarter 2019. Additionally, the IFR makes it clear that they will allow businesses to submit copies of annual tax forms showing a decline of annual revenue by 25% or greater in 2020 compared to 2019 as proof of the revenue decline.

The last document that SBA issued was “Guidance on Accessing Capital for Minority, Underserved, Veteran and Women-Owned Business Concerns." It lists a number of steps it is taking to provide increased access to PPP loans to those groups, including only accepting applications from community financial institutions for at least the first two days of the PPP loan portal re-opening.

As more information becomes available regarding the revived PPP process, the Big “I" will continue to provide updates to members in the News & Views e-newsletter.

Wyatt Stewart is Big “I" assistant vice president of federal government affairs.

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Thursday, January 7, 2021
On the Hill