SBA Issues Guidance on PPP Loan Forgiveness Regarding Laid-Off Workers Who Refuse Re-Employment
Dear WANADA Members,
Earlier this week, the Small Business Administration added another revision to
their Paycheck Protection Program guidance. In question 40, the SBA says a business that originally laid off an employee due to COVID-related financial concerns, but then attempted to rehire them with PPP funds, will not have their loan forgiveness amount reduced if that employer declines the offer of re-employment.
According to the guidance, this offer of re-hire must be in "good faith," and have been issued in writing. Both the offer and the rejection must be documented by the employer in order for the would-be employee's rejection to not count against the loan repayment amount. In addition, the guidance states that "employees who reject offers of re-employment may forfeit eligibility for continued unemployment compensation."
According to the guidance noted above, the SBA and Treasury Department will be issuing a more robust interim rule about this particular provision. We already know that, under
Section 1106 of the CARES Act, loan forgiveness is not contingent on retaining specific employees. Please review
NADA's robust CARES Act FAQ page, which is being updated at this point on a near-daily basis, for more information.
Yesterday, the Treasury Department also
issued additional guidance regarding some relatively small eligibility provisions. In Item 2, the Treasury Department states that student workers are generally classified as employees for the purpose of loan calculation and forgiveness, unless working for a higher-education institution or as part of a government work-study program, as defined under
34 CFR ยง 675.2.
Please let me or Joe Koch (
jk@wanada.org) know if you have any questions regarding the information contained within this notice. And as always, please continue to refer to the
WANADA COVID-19 Information Library as a one-stop repository of information that matters to you and your business.
