Treasury Department Modifies Paycheck Protection Program and Releases Improved Application

By: Pat Gouhin, Chief Executive Officer

The Paycheck Protection Program under the recently passed CARES Act provides forgivable loans for businesses with less than 500 employees, but included a huge hurdle for many startups, the Small Business Administration’s (SBA) “Affiliation Rules”.  ACA and many other organizations came together to respond to address the concern and request more clarification on the exclusion of small businesses from receiving vital emergency relief.  Great news came yesterday as House Minority Leader Kevin McCarthy announced that revisions will be made to make small businesses eligible for the PPP if they are not controlled by a single outside shareholder.  New guidelines for PPP loan eligibility are set to be released in the next few days.  While this still possibly excludes thousands of private equity-owned small businesses, McCarthy reported there could be future efforts or additional legislation to include these companies. 

The Treasury Department and the SBA have released a new PPP loan application that solves some issues in the first application, such as certification challenges and questions specific to 20%+ owners.  The original loan applications required certifications from all 20%+ owners, which would have meant minority owners becoming criminally liable for actions of the business.  The new loan application requires certifications from “The authorized representative of the Applicant”.  20%+ owners are required to provide information on criminal proceedings for their companies, but they will no longer be required to answer the question on behalf of the business as well.  The nationality question has also been improved to increase clarity, “Is the United States the principal place of residence for all employees of the Applicant included in the Applicant’s payroll calculation above?”

Access the revised Paycheck Protection Program application here