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SBA Issues Guidance for the Paycheck Protection Program (PPP) as Amended by American Rescue Plan Act (ARPA)
Practical Law Legal Update w-030-2443 (Approx. 5 pages)
SBA Issues Guidance for the Paycheck Protection Program (PPP) as Amended by American Rescue Plan Act (ARPA)
by Practical Law Finance
| Published on 21 Mar 2021 • USA (National/Federal) |
The Small Business Administration (SBA) issued guidance for the Paycheck Protection Program (PPP) as amended by the American Rescue Plan Act (ARPA). The new guidance clarifies the eligibility for first draw PPP loans for applicants with a North American Industry Classification System (NAICS) code beginning with 72 that have multiple physical locations. It also clarifies certain payroll cost exclusions included in 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). On December 27, 2020, the Economic Aid to Hard-Hit Small Businesses, Nonprofits and Venues Act (Economic Aid Act) (Pub. L. 116-260) was enacted to extend the PPP through March 31, 2021 and authorize the SBA to guarantee additional PPP loans (Second Draw PPP Loans) to eligible borrowers. The SBA has issued numerous interim final rules outlining the key provisions for implementing the PPP. For more information, see Practice Notes, Road Map to the Coronavirus Aid, Relief, and Economic Security Act (CARES Act): Paycheck Protection Program and Road Map to the Consolidated Appropriations Act, 2021: Paycheck Protection Program.
On March 11, 2021, the American Rescue Plan Act of 2021 (ARPA) (Pub. L. 117-2) expanded eligibility for first draw and Second Draw PPP Loans, revised the exclusions from payroll costs for purposes of loan forgiveness, and provided that a PPP borrower that receives a PPP loan after December 27, 2020 can be approved for a Shuttered Venue Operator Grant under certain conditions.
On March 18, 2021, the SBA issued an interim final rule (IFR) that revises the PPP rules for the ARPA’s amendments and, among other things, clarifies the eligibility for first draw PPP loans for applicants with a North American Industry Classification System (NAICS) code beginning with 72 that have multiple physical locations. It also clarifies certain payroll cost exclusions included in the Economic Aid Act.
The IFR is effective immediately. Comments to the IFR must be received within 30 days after publication in the Federal Register.
The IFR applies to PPP loans approved, and loan forgiveness applications submitted, on or after March 11, 2021.
Summary of IFR
The IFR covers the following issues:
- Eligible businesses, organizations, and individuals, including industry-specific eligibility, eligibility of businesses with a NAICS code 72 that employs no more than 500 employees per physical location, and internet publishing organizations (with additional affiliation waivers applicable to eligible internet publishing organizations).
- Eligibility of tax-exempt organizations described in IRC section 501(c), except for section 501(c)(4), including electric cooperatives and telephone cooperatives that have no more than 300 employees per physical location.
- Ineligible businesses, organizations, and individuals.
- Conditions under which a business may receive both a Shuttered Venue Operator (SVO) grant and a PPP loan.
- Additional required certifications in PPP borrower application as to SVO grants.
- Additional affiliation rules generally applicable to PPP loans for certain businesses and organizations.
- Eligibility for a Second Draw PPP Loan.
- Revised affiliation waivers for first draw and Second Draw PPP Loans for internet-only news or periodical publishers engaged in the collection and distribution of news, with not more than 300 employees per physical location, that are majority owned or controlled by a busines concern or organization that has a NAICS code of 519130.
- Ineligibility for loan forgiveness of first and Second Draw PPP Loans for payroll costs used to determine certain tax credits.