The Small Business Administration this afternoon issued an interim final rule implementing recent changes to the Paycheck Protection Program.
The interim final rule allows individuals who file an IRS Form 1040, Schedule C to calculate their maximum loan amount using gross income. SBA also has updated forms for borrowers and lenders to reflect these changes and step-by-step loan amount calculations.
This rule also stated the calculation change will apply only to loans approved after the rule’s effective date. Borrowers who have already had their loans approved cannot increase their PPP loan amount based on the new maximum loan formula.
Additionally, businesses that elect to use gross income to calculate a first-draw PPP loan will only have a safe harbor presumption of making the necessary certification of economic necessity if they reported $150,000 or less in gross income on Schedule C being used to apply for a first-draw PPP loan.
Borrowers with reported gross income greater than $150,000 will be subject to additional SBA review.
Also, the interim final rule removes a restriction on business at least 20% owned by an individual who was arrested for or convicted of a felony related to financial assistance fraud in the previous five years, or any other felony within the previous year, from obtaining PPP loans. It also removes a restriction on businesses at least 20% owned by individuals who are delinquent on student loan from receiving PPP loans.
You can read the entire interim final rule released by the SBA by clicking here.