May 15, 2020
The Small Business Administration (SBA) issued a
new interim final rule
Wednesday night allowing lenders to increase existing Paycheck Protection Program (PPP) loans to partnerships and seasonal employers. In separate guidance, the SBA extended the safe harbor for returning PPP loans from May 14 to May 18.
Some PPP loans were approved to partnerships or seasonal employers before the additional guidance was issued and, as a result, those businesses may not have received PPP loans in the maximum amount for which they are eligible. This interim final rule authorizes lenders to increase existing PPP loans to partnerships or seasonal employers to include appropriate amounts to cover partner compensation in accordance with the interim final rule posted on April 14, 2020, or to permit the seasonal employer to calculate its maximum loan amount using the alternative criterion posted on April 28, 2020.
Prior to this, PPP loans were required to be disbursed in a single disbursement. Now if a PPP loan has already been disbursed, this interim final rule authorizes the lender to make an additional disbursement of the increased loan proceeds prior to submission of the
initial SBA Form 1502
. 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.
In no event can the increased loan amount exceed the maximum loan amount allowed under the PPP Program, which is $10 million for an individual borrower or $20 million for a corporate group. Additionally, the borrower must provide the lender with required documentation to support the calculation of the increase.
Fannie Mae and Freddie Mac
Extended the Moratorium on Foreclosures
Fannie Mae and Freddie Mac extended the moratorium on foreclosures that was set to expire on May 17 to June 30. Renters and homeowners living in homes purchased with mortgages backed by Fannie Mae and Freddie Mac will not be able to be evicted or foreclosed on if they cannot pay their mortgage due to the COVID-19 pandemic.
“During this national health emergency, no one should be forced from their home,” Federal Housing Finance Agency Director Mark Calabria, the company’s regulator, said in a statement yesterday.
Under the CARES Act, Congress allowed renters and homeowners suffering through pandemic-related hardships to delay their payments for as long as a year if their loan is backstopped by Fannie Mae, Freddie Mac or another federal agency.
Feel free to contact any member of our team at (610) 828-1900 (PA) or (732) 341-3893 (NJ) with questions. Rich Higgins, CPA, managing principal – New Jersey office can be contacted at
Richard.Higgins@MCC-CPAs.com
. I can be reached at
Marty.McCarthy@MCC-CPAs.com
. As always, we are happy to help.
Stay safe,
Marty McCarthy, CPA, CCIFP
Managing Partner
McCarthy & Company
Source: Small Business Administration Interim Final Rule. May 13, 2020.
Disclaimer: This alert is for informational purposes only and does not constitute professional advice. Information contained in this communication is not intended or written to be used as tax advice, and cannot be used by the recipient to avoid penalties that may be imposed under the Internal Revenue Code. We strongly advise you to seek professional assistance with respect to your specific issue(s).
