Back
Back
Back
Back
Back
Back
Back
Back
Back
Back
Back
Back
Back
Back
Back
Back
Back

Changes to PPP Loan Based on April 2, 2020 SBA Guidance

Written by: Patrick C. Closson

4/6/2020 (Re-published in the Union Leader - 4/12/2020)

On April 2, 2020, the United States Small Business Administration and the United States Department of Treasury released interim rule and a revised application for the Paycheck Protection Program (PPP) under the CARES Act.  The interim regulations made a number of changes to prior guidance, which are summarized below.

  • Loans will be made on a first come, first served basis.
  • Interest Rate: 1.0% (previous guidance stated the interest rate at 0.5%).
  • Independent contractors (i.e., individuals who receive 1099s) do not count as employees for PPP loan calculations or loan forgiveness.
  • Federal employment taxes from February 15, 2020 – June 30, 2020 are excluded from “payroll costs”.  This suggests that borrowers do not have to deduct employee income tax withholding and FICA when calculating the loan amount from 2019 payroll costs, except to the extent total payroll costs exceeds $100,000 per employee (including FICA and income tax withholding). 
  • At least 75% of the loan proceeds must be used on payroll costs.
  • Not more that 25% of the loan proceeds to be forgiven may be used for non-payroll costs.
  • Although the loans are non-recourse, borrowers who knowingly use the loan proceeds for unauthorized purposes will be subject to additional liability such as charges for fraud. If one of the borrower’s shareholders, members, or partners uses the loan proceeds for unauthorized purposes, the SBA will have recourse against that shareholder, member or partner. 
  • The application was revised to remove the question regarding US citizenship. This question was replaced with a question to confirm that all employees included in the payroll calculation are US residents.

These are interim regulations and final regulations are expected later this month. We expect that we will continue to receive updated guidance on the PPP loan as the SBA receives applications from banks for these loans. 

The attorneys in the McLane Middleton Corporate Department are available to provide counsel regarding the PPP loans.  Should you wish to discuss resources available to your business, please do not hesitate to contact a member of our Corporate Department.

Additional Resource:

Integrity and trust

At McLane Middleton we establish and maintain long-standing relationships with our clients to help us better achieve their unique goals over time. This approach to building trust requires that our esteemed lawyers and professionals use their broad, in-depth knowledge and work together with integrity to ascertain sound resolutions to legal matters for their clients.

Strength in numbers

McLane Middleton is made up of more than 105 attorneys who represent a broad range of clients throughout the region, delivering customized solutions. As a firm we are recognized as having the highest legal ability rating. The firm is rated Preeminent by Martindale Hubbell and is recognized as one of the nation's leading law firms in Chambers USA. Our attorneys are distinguished leaders in their respective practice areas.

Meet Our People

Commitment and collaboration

McLane Middleton's versatile group of attorneys and paralegals become trusted authorities on each case through collaboration. We work with our clients to learn their individual needs first and foremost and, together, we develop comprehensive solutions to their specific legal matters. This approach helps us exceed our clients' expectations efficiently and effectively, client by client, case by case.

Practice Areas

A history of excellence

McLane Middleton was established in 1919 in New Hampshire, and has five offices across two states. However, deep historical roots don't allow you to become innate. Our firm is organized, technological, and knowledgeable. Our history means we are recognized. But our reputation is built on the highest quality of service and experience in very specific areas of law.

The Firm

Intelligence paired with action

Our team continuously seeks opportunities to enhance their professional development and put key learnings to action. The pursuit of further insight guides us to volunteer service opportunities, speaking engagements, and teaching roles. Our lawyers are sought after thought leaders across their industries, and recipients of leadership awards throughout the region.