The Treasury has been updating its Frequently Asked Questions (FAQ) on the Paycheck Protection Program as businesses continue to determine their eligibility and plan for loan forgiveness. Among the guidance released this week are clarifications on significant areas of the program, including:
- The Employee Retention Credit (ERC) in the CARES Act will be available to borrowers who return the Paycheck Protection Loan (PPL) funds. Many borrowers are facing this decision right now, based on recent SBA guidance that allows until May 14 to return funds if the borrower cannot certify the need for PPP relief. Borrowers who receive and keep PPL funds are not able to claim the ERC, which is a refundable payroll tax credit for qualified wages paid to retained employees during the COVID-19 crisis.
- If an employer makes a good faith effort to rehire an employee who rejects their offer to return to work, the employee may be included in the headcount that establishes the loan forgiveness amount. This exception is only for offers of the same salary/wages and number of hours. Both the offer and the rejection must be documented in writing. The FAQ also points out that employees may lose their eligibility for unemployment benefits if they refuse an offer to return.
- For purposes of determining a business’s eligibility for PPL funds, employees of foreign and U.S. affiliates must be included in the count. The PPP is limited to small businesses and nonprofits with 500 or fewer employees.
- As we previously communicated, the safe harbor to repay PPL funds if a business cannot certify its need for PPP relief has been extended from May 7 to May 14, 2020. The FAQ indicates that the Treasury will release additional guidance prior to May 14 on how this certification will be evaluated.
The full FAQ can be found on the Treasury’s website. If you have any questions about determining and documenting your eligibility for the PPP, please contact your Grassi advisor our Emergency Loan Consultants on our Crisis Response & Recovery hotline at 212.223.6216 or firstname.lastname@example.org.