May 15 New SBA PPP Guidance: Partnerships May Be Eligible to Increase Existing PPP Loans
The SBA issued an additional Interim Final Rule on May 14, 2020. This latest Interim Final Rule includes a provision that allows qualifying partnerships to increase the amount of their existing PPP loans for the self-employment income of partners that was excluded from the initial loan application.
Due to the initial confusion regarding whether the self-employment income of partners in a partnership was an allowable payroll cost, the SBA posted an Interim Final Rule on April 14, 2020 clarifying that a partner in a partnership may not submit a separate PPP loan application as a self-employed individual. Instead, the self-employment income of partners is an allowable payroll cost, up to $100,000 annualized, on the PPP loan application of the partnership.
Some partnerships’ PPP loans were approved before the additional guidance was issued, and as a result, those businesses may not have received the maximum PPP loan for which they were eligible.
The May 14, 2020 Interim Final Rule authorizes all PPP lenders to increase existing PPP loans to partnerships to include the appropriate amounts to cover the above-referenced partner compensation in accordance with the April 14, 2020 Interim Final Rule.
However, the Partnership must act quickly to receive any additional loan proceeds it may be entitled to.
The May 14, 2020 Interim Final Rule further authorizes approved lenders to make an additional disbursement of increased loan proceeds prior to its submission of the initial SBA Form 1502 that includes the loan. SBA Form 1502 is required to be submitted within 20 calendar days after a PPP loan is approved or, for loans approved before availability of the updated SBA Form 1502 reporting process, by May 22, 2020.
Sax’s Advice
We encourage all Partnerships that believe they may be entitled to obtain additional loan proceeds to contact their PPP lender immediately to ensure it is not too late to receive increased loan proceeds.
Sax will continue to update you as further details are made available. Reach out to your Sax advisor or email [email protected] with questions. For more and on-going information relative to your state and business, visit Sax’s COVID-19 Resource Center.
