A bipartisan group of over 100 Members of Congress are sending a letter today to the Small Business Administration requesting information, guidance and a meeting on the Economic Injury Disaster Loans (EIDLs). The letter discusses the problems small businesses are having with the program and states that “Based upon the CARES Act’s requirement that these grants be distributed within three days, many small business owners have been confused and frustrated regarding the status of their loan and grant application.” The letter further states that “We have received reports of long wait times and unsatisfactory answers regarding loan status when inquiries are placed.”
The $349 billion Paycheck Protection Program (PPP) is expected to run out of money as early as today. Senate Republicans seek approval of a 4th economic relief package which would include $250 billion to quickly replenish the PPP. Democrats in both the Senate and House want other changes to the program and an additional $250 billion for hospitals and local governments. The President is having a conference call with several lawmakers today on the issue.
The U.S. Treasury Department issued additional PPP Questions and Answers that cover a multitude of issues for both borrowers and lenders. While the Q & A do not have the force of law and are issued as only guidance for the program, there are several instances of clarification and links that would prove valuable to read and the link to the entire document is also at the bottom of this piece.
Examples of just 2 of the many issues are as follows:
…The PPP Interim Final Rule states that lenders must “[c]onfirm the dollar amount of average monthly payroll costs for the preceding calendar year by reviewing the payroll documentation submitted with the borrower’s application.” Does that require the lender to replicate every borrower’s calculations?
No. Providing an accurate calculation of payroll costs is the responsibility of the borrower, and the borrower attests to the accuracy of those calculations on the Borrower Application Form. Lenders are expected to perform a good faith review, in a reasonable time, of the borrower’s calculations and supporting documents concerning average monthly payroll cost. For example, minimal review of calculations based on a payroll report by a recognized third-party payroll processor would be reasonable. In addition, as the PPP Interim Final Rule indicates, lenders may rely on borrower representations, including with respect to amounts required to be excluded from payroll costs. If the lender identifies errors in the borrower’s calculation or material lack of substantiation in the borrower’s supporting documents, the lender should work with the borrower to remedy the issue.
Do PPP loans cover paid sick leave?
Yes. PPP loans covers payroll costs, including costs for employee vacation, parental, family, medical, and sick leave. However, the CARES Act excludes qualified sick and family leave wages for which a credit is allowed under sections 7001 and 7003 of the Families First Coronavirus Response Act (Public Law 116–127).