On April 24, 2020, the U.S. Small Business Administration (“SBA”) released an Interim Final Rule on Requirements for Promissory Notes, Authorizations, Affiliation and Eligibility (the “Interim Final Rule”) that provides further guidance for both lenders and borrowers participating in the Paycheck Protection Program (“PPP”). This Interim Final Rule, which will be effective immediately once published in the Federal Register, supplements, and in certain respects revises, previous rules released on April 2, 2020, April 3, 2020, and April 14, 2020.

In the form of Frequently Asked Questions, the Interim Final Rule provides the following guidance:

• Lenders may use their own form of promissory note or an SBA approved form for PPP loans. Promissory notes for PPP loans may include any terms and conditions that are not inconsistent with Sections 1102 and 1106 of the CARES Act; SBA’s interim final rules regarding the PPP; or SBA Form 2484.
• Hedge funds and private equity funds are not eligible for PPP loans.
• The affiliation rules, which group affiliates together for purposes of determining eligibility for PPP loans, apply to private equity-owned businesses in the same manner as any other business with outside ownership.
• State or local government owned hospitals are not ineligible for PPP loans as long as such hospitals receives less than 50% of their funding from state or local government sources (excluding Medicaid).
• Receipt of legal gaming revenues does not disqualify a business from eligibility for PPP loans.
• Participation in an employee stock ownership plan (“ESOP”) will not trigger application of the affiliation rules (i.e., the business and the ESOP will not be considered affiliates).
• A business is ineligible to receive PPP loans if, at any time before the PPP loan is disbursed, the business or its owner is the debtor in a bankruptcy proceeding.
• PPP loan recipients that repay their PPP loan in full by May 7, 2020 will be deemed by SBA to have made in good faith the required certification on their PPP loan application that “[c]urrent economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant.”

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