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BHBM Tax Law Alert | Guidance for Forgivable Loans


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FEDERAL TAX LAW UPDATE

U.S. DEPARTMENT OF TREASURY PROVIDES GUIDANCE FOR FORGIVABLE LOANS

On March 31, 2020, the U.S. Department of Treasury provided additional guidance (the “Guidance”) regarding the Paycheck Protection Program 7(a) loans (the “PPP Loans”). The Guidance provides an overview of the Paycheck Protection Program (the “Program”) and clarifies the application process for businesses applying for PPP Loans, as follows:

Timing of Applications

The Guidance provides that even though the Program is open until June 30, 2020, businesses are encouraged to apply as quickly as possible due to the Program’s overall funding cap ($349 billion) and the need for lenders to process the applications.

Please find PPP Loan application here.

Clarification

The Guidance clarifies that compensation of employees making over $100,000 per year can be included in the calculation of payroll costs, but is capped at $100,000 on an annualized basis for each employee.

Please find BHBM Tax Alert addressing the calculation of payroll costs and other provisions of the Program here.

Eligibility

Please find applicable SBA employee-based size standards here.

Affiliation Waiver Rules

Please find a list of businesses with NAICS Codes beginning with 72 here.

Please find a list of businesses that are franchises in the SBA’s Franchise Directory here.

Application Dates

Lenders

Please find a list of existing SBA lenders here.

Required Documents

Forgiveness Request Procedure

Terms of PPP Loans

Please note that the Guidance provides that if the PPP Loans proceeds are used by borrowers for fraudulent purposes, the U.S. government will pursue criminal charges.

Terms for PPP Loan Proceeds Not Forgiven

Certification

As part of the PPP Loan application, borrowers will need to certify in good faith that:

Please note that the Guidance provides that due to likely high subscription, it is anticipated that not more than twenty five percent (25%) of the forgiven amount may be for non-payroll costs.

Required Signatories for Application

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