Over the last month, Congress and the SBA have continued to tinker with the Paycheck Protection Program (PPP), most recently extending the PPP loan application deadline to August 8, 2020. As of June 30, 2020, $132 billion remained available under the PPP. The current lay of the land is this: PPP loan terms and loan forgiveness terms are more attractive to borrowers, and taking a loan is less risky after the SBA walked back enforcement action threats. We expect that many borrowers, including those who returned or didn’t accept proffered PPP loans, will reconsider a PPP loan in light of continued economic uncertainty due to increased COVID-19 infection rates and stalled efforts to re-open businesses.
It is interesting, to say the least, that the PPP morphed from desired, to toxic, and mostly back again in just a few short months. Just for fun, here’s how we got where we are:
The SBA has issued no new rules or guidance since June 26, despite many aspects of the PPP remaining unclear. That may be by design, but it kicks to the SBA review process critical loan forgiveness decisions. (We are not confident the SBA will make uniform decisions, and everyone should be braced for servicing lenders and the SBA to handle the process poorly.) In part because guidance is lacking, we believe most PPP borrowers will take good faith, aggressive positions to have the maximum loan amount forgiven, and that nearly all who reduced FTEs since February 15, 2020, will rely on the “compliance” safe harbor for those reductions. To help those borrowers document that reduced FTEs were due to direct or indirect compliance with federal guidance, we have compiled references to federal and Oregon COVID-19 guidance here.
We have published a number of alerts about the PPP, including our latest on the application deadline extension and recent considerations, here. The Treasury Department’s website, here, remains the best place to go for rules, guidance, and forms. A PPP guide we find useful is here.