The Small Business Administration yesterday issued an interim final rule implementing changes to the Paycheck Protection Program that were included in the most recent COVID-19 relief bill, which took effect earlier this month. The IFR will take effect upon publication in the Federal Register.
Among other things, the IFR changes the interplay between the Shuttered Venue Operator Grant Program and the PPP. Under the IFR, borrowers who received a first- or second-draw PPP loan after Dec. 27, 2020, and have been subsequently approved for an SVO grant will have the SVO grant reduced by the amount of the PPP loan. If a PPP applicant is approved for an SVO grant before SBA issues a loan number for the PPP loan, the applicant is ineligible for the PPP loan and acceptance of any PPP loan proceeds will be considered an unauthorized use.
In addition, the IFR makes several clarifications and changes, including:
- The addition of businesses with an NAICS code beginning with 72 that employ no more than 500 employees per physical location to the list of entities eligible for first-draw PPP loans.
- A clarification that electric cooperatives and telephone cooperatives are eligible if they have no more than 300 employees per physical location.
- A clarification that electric cooperatives and telephone cooperatives are no longer permitted to use the employee-based SBA size standard for their industry or SBA’s alternative size standard to determine size.
- Additional detail on the types of payroll costs that are not eligible for loan forgiveness.