Tag Archives: SBA

SBA: It’s (Maybe) Fine if You Didn’t Count the Employees of Your Foreign Affiliates for PPP Purposes

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In what might be a classic “now you tell me” scenario, the SBA issued a new rule May 21 saying that if an applicant failed to count the employees of its foreign affiliates when it was determining its eligibility, the SBA will not hold that against the applicant so long as the application was submitted before the SBA clarified that requirement.

The problem with that, however, is that because the safe harbor ended May 18, it’s highly likely that a lot of those businesses already gave their PPP loan back. They’d be forgiven for thinking they had to, as earlier this month Sen. Marco Rubio was indicating that Congress would investigate companies who took PPP funds for which they weren’t eligible.

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UPDATE: SBA Extends PPP Loan Payback Safe Harbor Provision Deadline (Again!) to May 18

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Since our post yesterday, the SBA has once again updated the safe harbor deadline for paying back Paycheck Protection Program loans to Monday, May 18.

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UPDATE: Too Little, Too Late? SBA Updates Guidance on PPP Safe Harbor the Day Before May 14 Deadline

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**UPDATE 5/14/20: Since publication of this post, the SBA has now updated the PPP Safe Harbor deadline to May 18. This post has been updated to include this additional information.

Just hours before the first extended May 14 deadline for businesses to return “unnecessary” Paycheck Protection Program loans without penalties, the SBA has published new guidance on how it will review borrowers’ required good-faith certifications.

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SBA OHA confirms 3-year look-back period for economic dependence affiliation

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Under the SBA’s regulations, affiliation between two companies might exist where one company derives 70% or more of its receipts from the other over the preceding three fiscal years. See 13 C.F.R. § 121.103(f)(2).

This economic dependence affiliation, as it is called, can be tricky to identify in practice—it is, after all, a rebuttable presumption of affiliation. That is, a company might be able to demonstrate that economic dependence doesn’t exist if, for example, it has only been in business for a limited amount of time and has only been awarded a limited number of contracts.

Recently, the SBA’s Office of Hearings and Appeals considered the bounds of the economic dependence affiliation rule and interpreted the three-year look-back period.

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PPP Update: New $20 Million PPP Loan Limit for Corporate Groups

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On Monday, May 4, the SBA will issue another Interim Final Rule updating the Paycheck Protection Program—this time limiting the “aggregate amount of PPP loans that any single corporate group may receive.”

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PPP Loan Payback? Safe Harbor Provision Lets Companies Pay Back “Unnecessary” Loan Money

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**Update 5/6/2020: As of May 5, the SBA updated its PPP FAQ’s, announcing its intention to extend the PPP Safe Harbor period to May 14. This post has been updated to reflect this change.

***Update 5/14/2020: As of May 14, the SBA updated its PPP FAQ’s once again, announcing its intention to extend the PPP Safe Harbor period to May 18. This post has been updated a second time to reflect this change. The SBA has also supplemented its guidance on the Safe Harbor Provision, as discussed here.

If you’re a parent, you might be familiar with the SBA and Treasury Department’s current strategy to crack down on businesses taking Paycheck Protection Program funds when they don’t qualify: if ineligible businesses ‘fess up and return the money by May 14, nobody gets in trouble.

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SBA Updates Interim Paycheck Protection Program Rule for Self-Employed Individuals

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As the social isolation saying goes: “Another day; another clarification from the SBA regarding the Paycheck Protection Program.” Alright, maybe that saying hasn’t caught on, yet. Nevertheless, the SBA did publish additional guidance specific to sole proprietors and general partners applying to the Paycheck Protection Program (PPP).

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