The U.S. Small Business Administration issued an Interim Final Rule on April 2, 2020, regarding the implementation of sections 1102 and 1106 of the CARES Act, which are specific to the much discussed Paycheck Protection Program (“PPP”) offered to many small businesses, including those with fewer than 500 employees. This final guidance will pave the way for lenders to begin implementing their programs to accept PPP loan applications and process for approvals. Of significance, the Interim Final Rule increases the interest rate for unforgiven portions of proceeds to 1.0%. It also restricts participation in the PPP by, in part, businesses that:
- are employers of household employees (such as nannies or housekeepers);
- are financial businesses;
- are passive businesses owned by developers and landlords;
- derive more than one-third of gross revenue from legal gambling activities; and
- are private clubs and businesses which limit the number of memberships for reasons other than capacity.
The Interim Final Rule does advise that additional final guidance will be issued on matters such as the applicability of affiliation rules at 13 CFT 121.103 and 121.301 to the PPP loans and loan forgiveness.