COVID-19 UPDATE: Treasury Announces Interim Final Rule for PPP, Reaffirms Need for Bipartisan Fix to Program May 24,2020

May 23, 2020: Last night’s loan forgiveness guidance interim final rule (IFR) from the Small Business Administration (SBA) and Department of Treasury reaffirms our commitment to bipartisan legislation from Congress to fix the Paycheck Protection Program (PPP). The IFR did not 1) extend the eight-week covered period for forgivable PPP loans, 2) adjust the 25% limit on non-payroll expenses that are forgivable, nor 3) address the two-year loan terms for those PPP loan amounts that are not forgiven.

Read more about the IFR here. We will continue to work for a legislative fix to the PPP.
We are also identifying another issue that may be problematic for restaurants. In cases when an employee declines an employer’s rehire offer, the employer has previously been granted de minimis exemptions from PPP loan forgiveness reductions. However, the IFR requires employers to inform the State Unemployment Insurance agency of the employee’s “rejected offer of reemployment within 30 days" of the rejection (pages 14 – 15). This may be a significant new challenge for employers that must manage new forms for their respective state reports, document and transmit these reports to achieve loan forgiveness, all while maintaining relationships with former employees. At an undisclosed time, the SBA will detail how borrowers will report information concerning rejected rehire offers to state unemployment insurance offices.
The IFR clarified that a full-time equivalent (FTE) employee is one who works 40 hours or more, on average, each week (pages 16 – 18). For forgivable payroll expenses, there are also two options to include part-time employees within an FTE count: one that calculates a ratio from 40 hours (30 hours worked would represent 0.75 FTE) and a second that allows each part-time employee to be counted as 0.5 FTE.
The National Restaurant Association plans to comment on this IFR. 

Read the full documents here: 

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