Enter to open, tab to navigate, enter to select
SBA Revises Paycheck Protection Program (PPP) FAQs for Effects of Economic Aid Act
Practical Law Legal Update w-030-0154 (Approx. 5 pages)
SBA Revises Paycheck Protection Program (PPP) FAQs for Effects of Economic Aid Act
by Practical Law Finance
| Published on 07 Mar 2021 • USA (National/Federal) |
The Small Business Administration (SBA) issued revised frequently asked questions (FAQs) to reflect changes made by the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act (Economic Aid Act) to the Paycheck Protection Program (PPP). The FAQs are updated to reflect the interim final rule implementing updates to the PPP, the interim final rule for second draw PPP loans, and the consolidated interim final rule on loan forgiveness requirements and loan review procedures as amended by the Economic Aid Act.
On March 27, 2020, the US government passed the CARES Act in response to the COVID-19 crisis. Under the CARES Act, the Small Business Administration (SBA) offered loans under the Paycheck Protection Program (PPP). For information on SBA interim final rules outlining the key provisions for implementing the PPP, see Practice Notes, Road Map to the Coronavirus Aid, Relief, and Economic Security Act (CARES Act): Paycheck Protection Program.
On December 27, 2020, the US government passed the Consolidated Appropriations Act, 2021 (CAA-21) that includes $900 billion in a second round of COVID-related stimulus relief (see Road Map to the Consolidated Appropriations Act, 2021: Paycheck Protection Program).
The CAA-21 includes the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act (Economic Aid Act) (Pub. L. 116-26) that extends the PPP through March 31, 2021, adds additional funding for PPP loans, authorizes second draw PPP loans (Second Draw PPP Loans), and revises certain PPP requirements, including provisions related to making PPP loans and forgiveness of PPP loans (see CARES Act: Stimulus for Small Businesses Under the SBA Checklist: Consolidated Appropriations Act, 2021 Expansion of the PPP).
On March 3, 2021, the SBA issued revised frequently asked questions (FAQs) to reflect changes made by the Economic Aid Act to the PPP.
FAQ Revisions
The FAQs are updated to reflect the interim final rule implementing updates to the PPP, the interim final rule for Second Draw PPP Loans, and the consolidated interim final rule on loan forgiveness requirements and loan review procedures as amended by the Economic Aid Act. See Legal Updates:
In addition, the footnotes to the FAQs specify:
- Which questions in the FAQs were revised on March 3, 2021 (and on previous dates).
- FAQs that apply only to first draw PPP loans (First Draw PPP Loans).
- Additional clarifications to the FAQs.
- FAQs that were revised for subsequent rulemaking and additional SBA forms.
New FAQs
The FAQs added new questions (Nos. 57 – 65) covering the following topics:
- The definition of "lobbying activities" in determining the eligibility of section 501(c)(6) organizations and destination marketing organizations for First Draw PPP Loans and Second Draw PPP Loans.
- Whether PPP loans may be used for lobbying activities or expenditures.
- Whether a borrower that files for bankruptcy protection after disbursement of the First Draw PPP Loan is eligible for loan forgiveness.
- Whether a borrower that files for bankruptcy protection after disbursement of the First Draw PPP Loan is eligible for a Second Draw PPP Loan.
- How the separate requirement that the borrower must use at least 60 percent of the First Draw PPP Loan proceeds for payroll costs affects the Second Draw PPP Loan certification that all First Draw PPP Loan proceeds were used only for eligible expenses.
- If a borrower is eligible for a Second Draw PPP Loan if it receives partial forgiveness of its First Draw PPP Loan.
- Whether borrowers may use the SBA’s established size standards (either revenue-based or employee-based) or alternative size standard to qualify for a Second Draw PPP Loan.
- Whether certain applicants can use an Individual Taxpayer Identification Number (ITIN) instead of a Social Security Number (SSN) on the PPP loan application and loan forgiveness forms.
- If, as of December 27, 2020, an employer that receives a First Draw PPP Loan or Second Draw PPP Loan is also eligible for the Employee Retention Credit.
The SBA noted that these FAQs are still being updated for the interim final rule issued March 3, 2021 on Revisions to Loan Amount Calculation and Eligibility (see Legal Update, SBA Issues New PPP Application Forms for Borrowers and Lenders).