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Vol. XIX, Issue 25

May 7, 2020

CARES Act Update—SBA PPP Loans

As part of its continuing efforts to fine-tune implementation of the massive Coronavirus Aid, Relief and Economic Security Act (CARES Act), the Department of Treasury (Treasury) this week issued further guidance on Paycheck Protection Program (PPP) loans available from the Small Business Administration (SBA). Treasury’s updated FAQs are here.

Wespath has summarized this information as an update to details previously shared in the April 30, 2020 On Board Express.

Extended Deadline to Return PPP Loans

New FAQ #43—Extends PPP loan return deadline to May 14—Late on May 5, Treasury added a new FAQ #43 (page 15) that extends until May 14, 2020 the deadline for PPP loan recipients to decide whether to return loan funds under the safe harbor provision. The deadline previously communicated would have been today, May 7. Treasury’s new FAQ is below.

43. Question: FAQ #31 reminded borrowers to review carefully the required certification on the Borrower Application Form that “[c]urrent economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant.” SBA guidance and regulations provide that any borrower who applied for a PPP loan prior to April 24, 2020 and repays the loan in full by May 7, 2020 will be deemed by SBA to have made the required certification in good faith. Is it possible for a borrower to obtain an extension of the May 7, 2020 repayment date?

43. Answer: SBA is extending the repayment date for this safe harbor to May 14, 2020. Borrowers do not need to apply for this extension. This extension will be promptly implemented through a revision to the SBA’s interim final rule providing the safe harbor. SBA intends to provide additional guidance on how it will review the certification prior to May 14, 2020.

Treasury created this safe harbor provision in response to media and policymaker attention to numerous publicly traded companies, national restaurant chains and very large private companies that received PPP loans. The safe harbor is aimed at borrowers that determine, in retrospect, their PPP loan application may not have been necessary at the time they applied. The SBA and Treasury will deem borrowers that return funds on or before May 14, 2020, to have made the certification regarding ‘need’ in good faith. It is up to each borrower to determine their need for the PPP loan based on its facts and circumstances and current economic uncertainty.

Employee Retention Credit Clarification

In addition, as another example of the rapid development of guidance under the CARES Act, Treasury added another FAQ late on May 6. New FAQ #45 (page 15) clarifies that an organization that returns PPP funds under the safe harbor will be eligible for the “Employee Retention Credit,” another economic relief provision of the CARES Act. The Employee Retention Credit is described in brief in our summary here (pp. 9-10). Wespath is working in partnership with the General Council on Finance and Administration (GCFA) on a more detailed summary of the Employee Retention Credit, which we will publish soon.

New FAQ #45. Question: Is an employer that repays its PPP loan by the safe harbor deadline (May 14, 2020) eligible for the Employee Retention Credit?

45. Answer: Yes. An employer that applied for a PPP loan, received payment, and repays the loan by the safe harbor deadline (May 14, 2020) will be treated as though the employer had not received a covered loan under the PPP for purposes of the Employee Retention Credit. Therefore, the employer will be eligible for the credit if the employer is otherwise an eligible employer for purposes of the credit.

Further Guidance to Come

Wespath is awaiting detailed guidance from Treasury and the SBA about PPP loan forgiveness and certifications. We will analyze such guidance for our stakeholders once that guidance is issued.

Weekly Updates to Participants

This week's participant e-blast communication was sent yesterday, May 6. It highlights Wespath's efforts to recognize the heroes who have stepped up during the pandemic, tips for avoiding security threats from villains who are attempting to take advantage of others and information about federal legislation addressing financial and health impacts on individuals and communities. Click here to view the e-blast communication.

Reminder: HealthFlex Plan Sponsor Call and Actuarial Update

Please save the date for the following meetings. We will provide login information closer to the date of each online meeting:

• A HealthFlex Plan Sponsor call will be held Thursday, May 14, from 2:30 to 4:00 p.m., Central Time.

• An Actuarial Update is scheduled for Thursday, May 21, from 12:30 to 2:30 p.m., Central Time.

Both calls will be recorded and shared for those who are not able to attend.

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