On May 13, 2020, the SBA updated its Interim Final Rule to include additional guidance related to potential PPP loan increases. The SBA acknowledged that some PPP loans to partnerships or seasonal employers may have been originated prior to guidance being released by the SBA which may have increased the maximum loan amount available to the borrower. In these cases, the SBA will now allow the lender to loan additional funds to the borrower if certain requirements are met.
One such case relates to partnerships that report self-employment income on their partners’ IRS Schedules K-1. In the event that the original loan application of the partnership excluded partner self-employment income, those amounts may be included as qualifying payroll costs, up to $100,000 annualized, per partner. If the lender has not yet filed SBA Form 1502 related to the loan, the total payroll costs from which the loan amount is determined may be increased by these applicable payroll costs which were not previously included.
The SBA also clarified that seasonal employers that received their loan prior to the release of alternative guidance on April 28, 2020, and that would be eligible for a higher loan amount based on such guidance, are now eligible to have their loan amounts increased if their lender has not yet filed Form 1502. The alternative guidance allows seasonal employers to calculate their loan amount based on any consecutive 12–week period between May 1, 2019 and September 15, 2019.
If your business may meet one of these criteria, please reach out to your lender or connect with a Warren Averett advisor immediately. Due to the time constraints caused by the Form 1502 requirement, time may be of the essence.
This article reflects our views at the time this article was written and should be used as reference only. We recommend that you talk to your Warren Averett advisor, or another business advisor, for the most current information or for guidance specific to your organization.