SBA Releases Interim Rule With Guidance on PPP Loan Deferral

An interim final rule that revises parts of the Payroll Protection Program was released June 22 by the Small Business Administration.

Most of the aspects of SBA Interim Final Rule RIN 3245-AH52 previously were disclosed, but the rule released June 22 included guidance on the deferral period for loans under the Paycheck Protection Program Flexibility Act (Pub. L. 116-142).

The loan program, administered by the SBA, started April 3 and is part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act (Pub. L. 116-136) that was enacted March 27. The program allows qualifying employers with up to 500 employees to apply for a forgivable loan to cover payroll costs over a maximum of 24 weeks.

Under the interim final rule, an employer that applies for forgiveness before the end of the covered period and had reduced an employee’s salary or wages by more than 25% must account for the excess salary reduction for the full period of up to 24 weeks.

For an employer that does not apply for loan forgiveness within 10 months after the last day of the coverage period, or if SBA determined that the loan was not eligible for forgiveness, the PPP loan no longer is deferred and the borrower must begin paying principal and interest, the rule said.

Comments on the interim rule are due 30 days after publication in the Federal Register. Electronic submissions should be made after publication through the Federal Rulemaking Portal, with the identification number SBA-2020-0038 in the instructions search box.