The SBA, continuing the trend, has issued more guidance regarding the PPP loan. A few of the highlights are below:
(1) How to handle employees who refuse to return: The SBA provided specific steps that employers should take if an employee who was furloughed is offered their job back but refuses to return. The guidance states that if the steps are followed the loss of the employee will not hurt the employer for headcount purposes (for purposes of forgiveness of the PPP Loan).
(2) Extension to May 14, 2020: The SBA extended the ability for certain businesses, such as publicly traded companies and private equity owned companies to return PPP loan funds without penalty. The SBA issues guidance a few weeks ago stating that certain companies with access to other capital funds (e.g. Potbelly’s, Shake Shack) did not properly certify their need for the PPP loan funds. Most small businesses without access to significant forms of capital continue to qualify for the loan program however.
(3) Forgiveness Reductions: the SBA provided some clarity surrounding how the headcount and salary reduction in forgiveness payments will work. It was clarified at headcount, for forgiveness purposes, refers to full time equivalent employees and not to all employees. It also was clarified that only reductions in average salary above 25% will reduce loan forgiveness generally.
Virtus Law continues to monitor developments in this area and will post updates periodically as additional guidance is added.