On Tuesday, May 5, the U.S. Treasury updated their Paycheck Protection Program Loans Frequently Asked Questions document with Questions 43 and 44. Question 43 extends the safe harbor period for repaying a PPP loan from Thursday, May 7 until Thursday, May 14. They also indicate in the answer to Question 43 that further guidance on how the SBA will review the certification will be issued prior to May 14. The safe harbor, originally established on April 23, allows any business that accepted a loan prior to the issuance of the guidance and repays the loan in full by the safe harbor to be deemed by the SBA to have made the required certification in good faith.
Question 44 addresses which employees must be included in the employee count for purposes of evaluating compliance with the 500 or fewer employee size standard. The answer to this question states that an applicant must count all of its employees and the employees of its U.S. and foreign affiliates, absent a waiver of or an exception to the affiliation rules. This clarifies some uncertainty the FAQ had introduced earlier and brings the PPP loans into alignment with the SBA’s standard requirements for its loan programs under the affiliation rule in 13 CFR Section 121.301 which states that the SBA will count the employees of both the concern whose size is at issue and all of its domestic and foreign affiliates.
You should review the latest guidance in detail on the Treasury website and consider having legal counsel evaluate the impact of these most recent announcements on your eligibility for the PPP loan. For reference, the Treasury Department PPP FAQ document can be accessed here.