COVID-19 Paycheck Protection Program

An interim final rule – affecting changes to the Paycheck Protection Program was released Friday, April 24th.

It purports to:

• Provide guidance to PPP lenders, (i) permitting them to use their own form of promissory note (or an SBA form), and (ii) confirming that a lender need no separate SBA authorization for the SBA to guarantee a PPP loan; although they are required to execute an SBA Form 2484 to issue PPP loans and receive a loan number for each PPP loan.
• Clarify eligibility
  • Hedge funds and private equity firms are not eligible for PPP loans.
  • Businesses engaged in legal gambling activities are eligible (subject to size and other eligibility criteria) – and 13 CFR Part 120.110(g) is deemed inapplicable.
  • Businesses that are debtors in bankruptcy proceedings are not eligible.
  • Agricultural producers, farmers, ranchers, and small agricultural cooperatives are eligible (subject to size and other eligibility criteria)
• Adding the safe harbor with respect to the certification concerning need, after specifying in an FAQ document that borrowers must take into account their current business activity and their ability to access other sources of liquidity sufficient to support their ongoing operations, and questioning, exemplarily, such certification made by a company with substantial market value and access to capital markets. The safe harbor requires repayment of loan proceeds received by such borrowers in full by May 7, 2020.

For additional help and guidance, please contact firm Counsel Keith A. Krauss, Esq. at kkrauss@genovaburns.com or Associate Young-Ji Park, Esq. at ypark@genovaburns.com or 973.533.0777.