In addition, the PPP Flexibility Act added a new safe harbor to provide that a PPP borrower will not have a reduction in forgiveness amount due to a cutback in FTE employee count if the PPP borrower can document in good faith an inability to:
Rehire the same or similar employees that were in place as of Feb. 15.
Hire similarly qualified employees for unfilled positions on or before Dec. 31, 2020.
Return to the same level of business activity before Feb. 15 due to COVID-related social distancing, sanitation, and other safety requirements or guidance from certain government agencies.
This basically means that if on Dec. 31, 2020, shops, restaurants, and gyms (for example) cannot fully open due to government restrictions, any loss in FTE employees resulting from such restrictions should not be considered in calculating a required reduction in the loan forgiveness amount.
Finally, the PPP Flexibility Act extended the deferral period on principal and interest payments from six months after the loan funding date to the time that SBA remits the forgiveness amount to the lender.
On June 30, the last day to apply for a PPP loan, the SBA had approved more than 4.8 million PPP loans for $520.6 billion, and had issued 22 interim final rules to provide borrowers and lenders with needed guidance.
This included more than 700 credit unions of less than $1 billion in assets that made more than 60,000 loans totaling almost $3 billion. Just a few hours before the application window was scheduled to close, the Senate passed by unanimous consent an extension of the PPP to August 8. On July 1, the House passed the bill, which means all that is needed now is the president’s signature for the extension to take effect.
On July 4, the president signed legislation to extend the deadline for eligible businesses to apply for loans under the PPP to Aug. 8, 2020.
Congress continues to work on a fifth coronavirus relief package that will likely include additional PPP funding and other PPP-related provisions.
PATRICIA O'CONNELL is CUNA’s lead compliance counsel. Contact CUNA’s compliance team at cucomply@cuna.coop.
Credit Union Magazine’s Spring 2022 edition highlights inclusive lending, succession planning, fair lending and artificial intelligence, and the use of environmental, social, and governance (ESG) as a competitive differentiator.
