Uncovering the New Interim Final Rule
On May 13, 2020, the SBA and Treasury issued interim Final Rule on Loan Increases, allowing partnerships and seasonal businesses to potentially qualify for higher loan amounts from the Paycheck Protection Program (PPP) – even if they have already received a disbursement.
Prior to this Interim Rule
Partnerships and LLCs were allowed to begin filing for PPP loans on April 3, 2020. At that time, the guidance did not include partners in the payroll calculation. The assumption was that partners would file as self-employed.
However, on April 14, the SBA posted an interim final rule that said a partner in a partnership would not be able to file for a separate PPP loan. It stated that general active partners in a partnership, those with self-employed income, should be reported in the payroll costs calculation of the partnership, up to $100,000 annualized.
New Interim Final Rule
Interim Final Rule issued May 13 provides:
- PPP lenders can increase existing PPP loans to:
- Partnerships to include partner compensation up to $100,000, annualized per partner
- Seasonal employers to use the alternative criterion to calculate the maximum loan amount.
- Lenders are allowed to make an additional disbursement for PPP loans already disbursed due to the changes listed above.
- The rule maintains the $10 million limit for an individual borrower and $20 million limit for a corporate group.
- The borrower must provide the lender with the required documentation to support the increase.
- The increase will only be allowed if the lender has not submitted the initial SBA Form 1502 to the SBA. If the form has already been submitted, the borrower will not be able to increase the loan.
If you believe you may qualify for an increase under the new Interim Final Rule, contact your bank as soon as possible, as the SBA Form 1502 was originally due on May 18 but has been extended to May 22. If you have any further questions – never hesitate to reach out.