SBA Loan Program Replenished And New Info Available
On April 27, the U.S. Small Business Administration (SBA) relaunched its Paycheck Protection Program (PPP), which provides forgivable loans to businesses with up to 500 employees. The move came after Congress passed and President Donald Trump signed legislation granting $310 billion in additional loan authority for the PPP.
Ahead of the rollout, SBA released several new documents, including:
- An overview of how companies can estimate their expected loan amounts.
- An Interim Final Rule on corporate groups and non-bank and non-insured depository institution lenders that limits PPP loan amounts to $20 million for corporate groups, which are defined as businesses that are “majority owned, directly or indirectly, by a common parent.”
- An updated Frequently Asked Questions
Additionally, while the SBA still has not released guidance on how the forgiveness of PPP loans will work, in new guidance issued May 1, the Internal Revenue Service explained how it will handle the tax treatment of deductible expenses for businesses receiving PPP loans. To prevent a “double tax benefit,” for example, the IRS will not allow taxpayers to deduct trade or business expenses (e.g., payroll) associated with forgiven PPP loans, which under federal legislation are not considered as taxable income. KPMG summarizes the IRS guidance here.
On May 3, the SBA and Treasury announced that, within six days of the PPP reopening, 2.2 million loans were approved with a total value of more than $175 billion. The average loan size since April 27 was $79,000. Click here to read SBA’s report that discusses where these loans are going.
Even though the new tranche of PPP money is going fast, businesses should still apply since Congress may decide to replenish it when it runs out. And because there is money set aside for smaller lenders, small businesses should check with their local banks or credit unions to see if they are offering PPP loans.
As a reminder, on April 29, MSCI hosted a webinar with experts from the U.S. Chamber of Commerce to discuss the PPP.
Click here to watch. More PPP information is available at www.SBA.gov/PaycheckProtection and www.Treasury.gov/CARES.