SBA – Jan. 19, 2021 – SBA has announced availability of the following Paycheck Protection Program (PPP) guidance and documents related to loan forgiveness.
Each of the following was revised Jan. 19, 2021:
- PPP Interim Final Rule: Loan Forgiveness Requirements and Loan Review Procedures as Amended by Economic Aid Act
- Paycheck Protection Program EZ Loan Forgiveness Application Form 3508EZ
- Paycheck Protection Program Loan Forgiveness Application Form 3508S
- Paycheck Protection Program Borrower’s Disclosure of Certain Controlling Interests
All dealer PPP borrowers must file the new controlling interest disclosure form (Form 3508D). PPP borrowers who applied for forgiveness prior to Dec. 27, 2020, must file Form 3508D with their lenders no later than Jan. 26, 2021. PPP borrowers who have applied, or that will apply, for forgiveness on or after Dec. 27, 2020, must file Form 3508D within 30 days of doing so.
Dealer PPP borrowers who have yet to apply for loan forgiveness should carefully review the new loan forgiveness IFR, as it replaces all prior IFRs addressing loan forgiveness (see above). It is laid out in question-and-answer format and, among other things, lists forgivable expense items added by the Economic Aid to Hard-Hit Small Businesses, Nonprofits and Venues Act (Economic Aid Act).
Dealer PPP borrowers who have yet to apply for loan forgiveness should also make sure to use the appropriate revised forgiveness application when they do so (see above). Reminder: to avoid having to make loan payments, PPP borrowers should file for forgiveness no later than 10 months after the end of their covered periods.
Visit SBA’s website through the link above for other information related to PPP loans, including specifics related to the reopened program which, in accordance with the Economic Aid Act, extends until March 31, 2021. Existing and prospective dealer PPP loan borrowers should consult legal counsel, accountants, and lenders regarding program specifics.
SBA – Oct. 8, 2020 – As The Small Business Administration (SBA) added a new entry to its Paycheck Protection Program FAQs document Oct. 7 regarding the Flexibility Act.
FAQ 52 follows:
Question: The Paycheck Protection Program Flexibility Act of 2020 (Flexibility Act) extended the deferral period for borrower payments of principal, interest, and fees on all PPP loans to the date that SBA remits the borrower’s loan forgiveness amount to the lender (or, if the borrower does not apply for loan forgiveness, 10 months after the end of the borrower’s loan forgiveness covered period). Previously, the deferral period could end after 6 months. Are lenders and borrowers required to modify promissory notes used for PPP loans to reflect the extended deferral period?
Answer: The extension of the deferral period under the Flexibility Act automatically applies to all PPP loans. Lenders are required to give immediate effect to the statutory extension and should notify borrowers of the change to the deferral period. SBA does not require a formal modification to the promissory note. A modification of a promissory note to reflect the required statutory deferral period under the Flexibility Act will have no effect on the SBA’s guarantee of a PPP loan.(n.b. footnote in document).
The SBA additionally issued a Forgiveness Payment Notification Letter to the forgiveness Platform Authorizing Officials (AO) noting that SBA has begun remitting PPP loan forgiveness payments to lenders.
The page will be continuously updated and is accessible through the following link.
NADA – Sept. 1, 2020 – The Small Business Administration (SBA) issued new respective guidance regarding the Paycheck Protection Program (PPP).
PPP loan proceeds spent on rent and mortgage interest to third parties generally are expenses eligible for forgiveness. SBA’s new clarifies that rent paid to a real estate entity owned by a borrower is forgivable only to the extent that the real estate entity makes mortgage interest or lease payments to a third party. Most, if not all, franchised dealership PPP borrowers’ forgivable expenses will consist of payroll and payroll-related items versus nonpayroll expenses such as rent or mortgage interest. Dealers are recommended to contact CPAs and lenders before filing a forgiveness application that relies on rent payments paid to a related real estate entity.
CLICK HERE for SBA PPP FORGIVENESS GUIDANCE
NADA – August 12, 2020 – Yesterday, the Small Business Administration (SBA) issued new borrower guidance on the Paycheck Protection Program (PPP). These include new FAQs on the use of loan proceeds for medical plan costs and on how the PPP interacts with Economic Injury Disaster Loans (EIDL). For more information, please see the following:
- A new FAQ 51 clarifying that allowable payments for the provision of group health benefits include vision and dental benefits.
- Several new FAQs on the interaction between EIDL and PPP loans.
- A new Interim Final Rule on how to appeal an adverse SBA PPP loan review decision.
As appropriate, dealerships with PPP and/or EIDL loans should review the new FAQs and IFR with their lenders and, as necessary, with outside advisors such as CPAs and attorneys.
SBA – July 27, 2020 – A July 23 SBA procedural notice outlines the process by which PPP lenders must review loan forgiveness applications and notes that lenders may begin submitting loan forgiveness decisions to SBA on August 10. Dealerships with PPP loans should review the SBA notice with their lenders and, as necessary, with outside advisors such as CPAs and attorneys. Note: additional PPP loan forgiveness information is available from NADA’s Coronavirus Hub, including Guidance on the Use and Forgiveness of PPP Loan Proceeds, a recent webinar and CARES Act FAQs.
The loan forgiveness process begins when a PPP borrower files a forgiveness application (or EZ forgiveness application) with its PPP lender. A PPP borrower may file its application after it has used all loan proceeds for which it seeks forgiveness. The best time to file a forgiveness application will reflect a careful consideration of several factors related to maximizing loan forgiveness and ensuring that all required supporting documents are available. PPP lenders must review forgiveness applications in good faith and in accordance with specified procedures and must work with borrowers to resolve any errors or omissions they identify.
Fisher Phillips – June 24, 2020 – The Small Business Administration (SBA) just released important new rules regarding forgiveness of Paycheck Protection Program (PPP) loans. The June 22 Revisions to Loan Forgiveness Interim Final Rule and SBA Loan Review Procedures Interim Final Rule offer additional clarification on the rules governing forgiveness of PPP loans, while providing borrowers with additional flexibility. What do employers need to know about these developments?
If we have used all the PPP loan proceeds before the end of the Covered Period, can we apply for forgiveness prior to the end of the covered period?
Yes. The new rules clarify that a borrower may submit a loan forgiveness application before the end of the Covered Period if the borrower has used all the loan proceeds for which the borrower is requesting forgiveness.
SBA and U.S. Dept. of the Treasury – June 17, 2020 – The U.S. Small Business Administration (SBA), in consultation with the Dept, of the Treasury, posted a revised, borrower-friendly Paycheck Protection Program (PPP) loan forgiveness application implementing the PPP Flexibility Act of 2020, signed into law by President Trump on June 5, 2020.
In addition to revising the full forgiveness application, SBA also published a new EZ version of the forgiveness application that applies to borrowers that:
- Are self-employed and have no employees; OR
- Did not reduce the salaries or wages of their employees by more than 25%, and did not reduce the number or hours of their employees; OR
- Experienced reductions in business activity as a result of health directives related to COVID-19, and did not reduce the salaries or wages of their employees by more than 25%.
CLICK HERE for the SBA and DEPT. of TREASURY NEWS RELEASE
CLICK HERE for the FULL PPP FORGIVENESS APPLICATION
CLICK HERE for the EZ PPP FORGIVENESS APPLICATION
CLICK HERE for PPP LOAN FORGIVENESS APPLICATION INSTRUCTIONS
Federal Reserve Board – June 8, 2020 – The Federal Reserve Board has expanded its Main Street Lending Program to allow more small and medium-sized businesses to be able to receive support.
The Board lowered the minimum loan amount, raised the maximum loan limit, adjusted the principal repayment schedule to begin after two years, and extended the term to five years, providing borrowers with greater flexibility in repaying the loans. The Board expects the Main Street program to be open for lender registration soon and to be actively buying loans shortly afterwards.
NADA – May 1, 2020 – The Federal Reserve Board (FRB) announced several favorable changes to its Main Street Lending Program (MSLP) April 30.
The program was developed under the CARES Act to help provide small- and medium-size businesses additional liquidity to respond to the pandemic.
As initially announced, Main Street Loan recipients were precluded from paying dividends or other capital distributions for any purpose for as many as 12 months after the loan is outstanding.
In comments to the FRB NADA explained that this broad restriction would unnecessarily preclude pass-through entities from paying dividends to satisfy shareholder tax obligations.
In response, the FRB changed this limitation to provide that “an S corporation or other tax pass-through entity that is an Eligible Borrower may make distributions to the extent reasonably required to cover its owners’ tax obligations in respect of the entity’s earnings.” This essential change removes an element of the MSLP that would have precluded dealers from considering it as a viable means to enhance their liquidity.
Dealers who receive a loan through the Paycheck Protection Program (PPP) are eligible for an MSLP loan if they otherwise qualify. Dealers are encouraged to review the FRB’s revised term sheets for its various MSLP lending facilities as well as the frequently asked questions it issued today to explain the program in greater detail.
Fisher Phillips – April 8, 2020 –CLICK HERE for: What employers need to know about the unemployment provisions of the CARES Act
U.S. Senate Committee on Small Business & Entrepreneurship – March 30, 2020: CLICK HERE for: U.S. Senate Committee on Small Business & Entrepreneurship CARES Act Guide
NADA – June 5, 2020 – NADA updated its Paycheck Protection Program guidance based on the Flexibility Act signed by President Trump today. Among the key provisions are changing the threshold for the amount of PPP funds required to be spent on payroll costs to qualify for forgiveness to 60 percent of the loan amount and the “covered period” to 24 weeks.
Fisher Phillips – May 20, 2020 – The Small Business Administration (SBA) finally released its much-anticipated forgiveness application for borrowers who received a Paycheck Protection Program (PPP) loan.
It has been nearly two months since the program was signed into law and, since that time, lenders and borrowers alike have been anxiously awaiting for the PPP merry-go-round to stop and for the Treasury Department or the SBA to provide clear direction to achieve loan forgiveness.
And while some questions regarding forgiveness remain, the 11-page forgiveness application provides favorable guidance to borrowers to maximize their PPP loan forgiveness.
SBA and Dept. of Treasury – May 18, 2020 – Small Business Administration and the Treasury Department issued a Paycheck Protection Program (PPP) Loan Forgiveness Application, along with detailed instructions and worksheets May 14.
Dealership PPP borrowers will use the application to apply to their lender for forgiveness of costs properly incurred and payments properly made in conjunction with their eight-week forgiveness-covered period. Applications for PPP loan forgiveness generally will be made after (and maybe well after) a borrower’s eight-week covered period; unless the forgiveness reduction provisions of the PPP are not at issue for a particular dealer, it is expected that forgiveness applications will not be filed until after June 30, 2020.
The new application, instructions and worksheet provide clarity on several, but by no means all, PPP loan forgiveness issues. For example, the new documents do not address the question of whether any floorplan interest payments will be forgivable. However, and importantly, SBA is expected to soon issue rules and guidance to further assist PPP loan forgiveness applicants and their lenders. NADA intends to issue comprehensive guidance and conduct a webinar on PPP loan forgiveness after the expected SBA rules and guidance are issued.
The application, instructions and worksheets are designed to reduce compliance burdens and to simplify the forgiveness application process by including:
- An alternative option for calculating payroll costs using an “alternative payroll covered period” that aligns with a borrower’s regular payroll cycle.
- Flexibility to include eligible payroll and non-payroll expenses paid or incurred during a borrower’s eight-week covered forgiveness period.
- Step-by-step instructions on how to perform the calculations required by the CARES Act to confirm eligibility for loan forgiveness.
- Borrower-friendly implementation of the statutory exemptions from loan forgiveness reductions, including a “safe harbor” based on rehiring employees by June 30, 2020.
- Addition of a new exemption from the loan forgiveness reduction for borrowers who have made good-faith, written offers to rehire workers that were declined or who have other former employees who departed under certain conditions.
- A description of many of the documents that will need to be submitted in support of a forgiveness application.
PPP loan forgiveness will vary with the facts and circumstances of each individual loan and borrower. Consequently, NADA encourages dealership PPP borrowers to provide the application and accompanying documents to their legal and accounting advisors for careful review. (Again, note that additional forgiveness guidance will be forthcoming.) Considering the May 18, 2020, safe harbor deadline, borrowers with loan amounts of $2 million or more may wish to have these documents reviewed by their expert advisors sooner than later.
NADA – May 14, 2020 – NADA has published an analysis of new SBA /Dept. of Treasury guidance FAQ #46 that addresses the certification each dealer made if and when it applied for a PPP loan.
FAQ #46 establishes a new safe harbor for borrowers who received PPP loans of less than $2 million, which effectively removes the prior May 14, 2020, safe harbor loan repayment deadline. For loans in excess of $2 million, FAQ #46 states that borrowers will likely be audited, however, they may well have had an adequate basis for a good-faith certification.
A borrower notified by the SBA that its certification was not justified will not be eligible for forgiveness and must then pay back its PPP loan.
SBA and Dept. of Treasury – May 13, 2020 – SBA and the Dept. of Treasury has added question No. 46 removing the May 14, 2020 deadline for the so-called repayment “safe harbor”, and instead, setting a real categorical safe harbor for borrowers with loans less than $2 million (the vast majority of dealership borrowers) without respect to what type of business concern entity the borrower.
Question 46: How will SBA review borrowers’ required good-faith certification concerning the necessity of their loan request?
Answer: When submitting a PPP application, all borrowers must certify in good faith that “[c]urrent economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant.” SBA, in consultation with the Department of the Treasury, has determined that the following safe harbor will apply to SBA’s review of PPP loans with respect to this issue: Any borrower that, together with its affiliates,20 received PPP loans with an original principal amount of less than $2 million will be deemed to have made the required certification concerning the necessity of the loan request in good faith.
SBA has determined that this safe harbor is appropriate because borrowers with loans below this threshold are generally less likely to have had access to adequate sources of liquidity in the current economic environment than borrowers that obtained larger loans. This safe harbor will also promote economic certainty as PPP borrowers with more limited resources endeavor to retain and rehire employees. In addition, given the large volume of PPP loans, this approach will enable SBA to conserve its finite audit resources and focus its reviews on larger loans, where the compliance effort may yield higher returns.
Importantly, borrowers with loans greater than $2 million that do not satisfy this safe harbor may still have an adequate basis for making the required good-faith certification, based on their individual circumstances in light of the language of the certification and SBA guidance. SBA has previously stated that all PPP loans in excess of $2 million, and other PPP loans as appropriate, will be subject to review by SBA for compliance with program requirements set forth in the PPP Interim Final Rules and in the Borrower Application Form. If SBA determines in the course of its review that a borrower lacked an adequate basis for the required certification concerning the necessity of the loan request, SBA will seek repayment of the outstanding PPP loan balance and will inform the lender that the borrower is not eligible for loan forgiveness. If the borrower repays the loan after receiving notification from SBA, SBA will not pursue administrative enforcement or referrals to other agencies based on its determination with respect to the certification concerning the necessity of the loan request. SBA’s determination concerning the certification regarding the necessity of the loan request will not affect SBA’s loan guarantee.
SBA and Dept. of Treasury – May 5, 2020 – The SBA extended the deadline for its PPP borrower certification “safe harbor” from May 7, 2020 to May 14, 2020. See (Question 43 through the link to the SBA PPP FAQs above). NADA has asked SBA to provide further guidance on the certification “reconsideration” issue.
NADA also recently requested that the IRS confirm that businesses that received a PPP loan and later repay it within the safe harbor period established by SBA remain eligible for the Employee Retention Tax Credit (ERTC) notwithstanding the fact that such businesses technically “received” a PPP loan. (Section 2301(j) of the CARES Act provides that the ERTC is not available to businesses that receive a PPP loan.) Among other arguments, NADA explained that the purpose of this limitation was to ensure that businesses do not avail themselves of both benefits (the ERTC and the PPP) and those that returned PPP loans did not receive PPP benefits. This IRS agreed by issuing the following FAQ:
80. Is an employer that repays its Paycheck Protection Program (PPP) loan by May 7, 2020, eligible for the Employee Retention Credit? (updated May 4, 2020)
CLICK HERE for the FULL SBA PPP FAQs – UPDATED MAY 5
SBA and Dept. of Treasury – May 3, 2020 – The SBA and Dept. of Treasury added Q&A No. 40 to address whether Paycheck Protection Program (PPP) Loan forgiveness will be reduced if an employee is asked to return to work, but declines the employer’s offer. The answer indicates that an employer’s forgiveness will not be reduced if the employer made a good faith, written offer of rehire and the employer documents the employee’s rejection.
NADA – UPDATED April 30, 2020 – CLICK HERE for: CARES Act and dealerships FAQs
SBA – April 30, 2020 – CLICK HERE for: New SBA PPP Interim Final Rule supplements the previously posted interim final rules by limiting the amount of PPP loans that any single corporate group may receive and provides additional guidance on the criteria for non-bank lender participation in the PPP and requests public comment.
SBA – April 24, 2020 – SBA updated its Paycheck Protection Program (PPP) FAQs document today in preparation to allocate the second round of funding.
Question 31 indicates an applicant’s current liquidity may affect a loan forgiveness decision.
Q: Do businesses owned by large companies with adequate sources of liquidity to support the business’s ongoing operations qualify for a PPP loan?
A: In addition to reviewing applicable affiliation rules to determine eligibility, all borrowers must assess their economic need for a PPP loan under the standard established by the CARES Act and the PPP regulations at the time of the loan application.
Although the CARES Act suspends the ordinary requirement that borrowers must be unable to obtain credit elsewhere (as defined in section 3(h) of the Small Business Act), borrowers still must certify in good faith that their PPP loan request is necessary.
Specifically, before submitting a PPP application, all borrowers should review carefully the required certification that “[c]urrent economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant.”
Borrowers must make this certification in good faith, taking into account their current business activity and their ability to access other sources of liquidity sufficient to support their ongoing operations in a manner that is not significantly detrimental to the business.
For example, it is unlikely that a public company with substantial market value and access to capital markets will be able to make the required certification in good faith, and such a company should be prepared to demonstrate to SBA, upon request, the basis for its certification.
Lenders may rely on a borrower’s certification regarding the necessity of the loan request. Any borrower that applied for a PPP loan prior to the issuance of this guidance and repays the loan in full by May 7, 2020, will be deemed by SBA to have made the required certification in good faith.
SBA – April 23, 2020 – SBA has updated its Paycheck Protection Program (PPP) FAQs document in preparation to allocate the second round of funding.
Question 31 indicates an applicant’s current liquidity may affect a loan forgiveness decision.
demonstrate to SBA, upon request, the basis for its certification.
NADA – April 15, 2020 – SBA reports today it has fully allotted the $349 billion appropriation for the Paycheck Protection Progam.
- SBA is not able to accept new PPP loan applications
- Lenders are no longer be able to load PPP applications
- SBA is unable to maintain a queue for PPP applications
- PPP loan amounts may not be adjusted by lenders
- SBA is no longer able to accept new lender applications to become PPP lenders.
Prior to that announcement, NADA signed on to a letter to Congress and began pushing hard for additional PPP funding. Additional funding is important for dealers who have yet to apply for a PPP loan or have applied but were yet to be approved and funded.
NADA – April 15, 2020 – CLICK HERE for – PPP Loans: Use of proceeds and forgiveness. – NADA preliminary guidance – Dealers are now obtaining Paycheck Protection Program (PPP) loans and loans have been funded. The next set of questions confronting dealers involve the proper use of loan proceeds and the extent of the funds eligible to be forgiven.
Cincinnati Business Courier – April 13 – Finance pro’s six tips for getting your PPP application quickly approved
Fisher Phillips – April 9 – Employer FAQs on Paycheck Protection Program Loans
GCADA – UPDATED April 9, 2020 – CARES Act Paycheck Protection Program loan application process begins today: GCADA, OADA and NADA gain PPP access for dealerships with more than 500 employees through application OEM Franchisor Identification Numbers
- CLICK HERE for PPP OEM FRANCHISOR IDENTIFICATION NUMBERS – UPDATED APRIL 9, 2020
- CLICK HERE for the PAYCHECK PROTECTION PROGRAM BORROWER APPLICATION
- CLICK HERE AMENDED TEMPLATE ADDENDUM A for DEALERS ANSWERING ‘YES’ to QUESTION 3
- CLICK HERE to VIEW NEW SBA PPP RULE ISSUED APRIL 2
- CLICK HERE for the PAYCHECK PROTECTION PROGRAM LENDER APPLICATION
GCADA – April 6, 2020 – GCADA has identified local lending contacts for CARES Act Paycheck Protection Program (PPP). We will conintuously update this list. Please send additions to email@example.com
CLICK HERE for FIFTH THIRD INFORMATION
CLICK HERE for FIRST COMMONWEALTH BANK INFORMATION
CLICK HERE for GE CREDIT UNION INFORMATION
CLICK HERE for HUNTINGTON BANK INFORMATION
CLICK HERE FOR KEY BANK INFORMATION
CLICK HERE for PNC INFORMATION
Suspended PPP application process on April 6, 2020
NADA Dealership Lifeline Series Webinar – April 1, 2020: Making Sense Out of the New SBA Paycheck Protection Program: Practical Considerations for Dealers
U.S. Dept. of Treasury – March 31, 2020 – Coronavirus Aid, Relief and Economic Security (CARES) Act Paycheck Protection Program information
- CLICK HERE for a PAYCHECK PROTECTION PROGRAM OVERVIEW
- CLICK HERE for a PAYCHECK PROTECTION PROGRAM BORROWER’S INFORMATION SHEET
U.S. Chamber of Commerce – March 30, 2020: CLICK HERE for the U.S. Chamber of Commerce develops SBA CARES Act flowchart and overview
U.S. Senate Committee on Small Business & Entrepreneurship – March 30, 2020:
- CLICK HERE for the U.S. Senate Committee on Small Business & Entrepreneurship Paycheck Protection Program FAQs for small businesses
Internal Revenue Service – April 7, 2020 – CLICK HERE for: Employee retention tax credit overview
Internal Revenue Service – March 31, 2020 – CLICK HERE FOR: Employee retention credit available for many businesses affected by COVID-19
Clark Schaefer Hackett – March 24, 2020: Exploring evolving SBA Economic Injury Disaster Loan Program details
SBA – March 20, 2020: Economic Injury Disaster Loan overview and eligibility
HCDC, Inc. – March 19, 2020: What you need to know about Economic Injury Disaster Loans (EIDLs)