New PPP Loan Applications and IFR are Issued

By Stanley Rose June 11, 2020

(To reflect changes of the Paycheck Protection Program Flexibility Act of 2020)

In a June 5 article, we described changes, mostly to PPP loan forgiveness criteria, that were set in motion by H.R. 7010 – the Paycheck Protection Program Flexibility Act of 2020 (the “Flexibility Act”), noting that more guidance would be forthcoming. Some of that guidance arrived last night and today, consisting of the following:

1. New borrower loan application – SBA Form 2483
2. New lender loan application – SBA Form 2484
3. Updates to existing Interim Final Rule (IFR)

Note that the two applications are not updated forgiveness applications. Instead, these are revised applications related to the request for the loan itself, relevant to prospective borrowers. (As noted in our June 5 article, funds are still available.) We expect updated forgiveness applications soon, which will be relevant to all PPP borrowers, old and new.

The significance of the IFR update primarily is that it clarifies a major point of confusion in the Flexibility Act’s wording. Specifically, as the Flexibility Act is written, it appears that borrowers who don’t spend 60% of loan proceeds on payroll are not eligible for any amount of forgiveness at all. This is in stark contrast to original CARES Act and related rules that simply applied a proportionate reduction in forgiveness if PPP loan proceeds were skewed too heavily away from payroll.

The updated IFR makes it clear that the all or nothing “cliff” implied by the Flexibility Act was unintended, and that the consequences for not meeting the 60% payroll threshold will remain to be partial (and logical) forgiveness reduction.

We will continue to provide further updates when new forgiveness applications or additional relevant guidance are made available.

For more information or a discussion on how this may impact you, please contact your BNN advisor at 800.244.7444.