Initial guidance provided on April 14, 2020, prohibited partners in partnerships from submitting a separate PPP loan application for themselves as self-employed individuals. Instead, the self-employment income of general active partners was to be reported as a payroll cost, up to $100,000 annualized, on a PPP loan application filed by, or on behalf of, the partnership.
That initial ruling meant that partnerships that had already submitted PPP applications without including partner self-employment income likely received far less funding than the maximum loan amount. A similar interim final rule dated April 28 established an alternative criterion for calculating the maximum loan amount for PPP loans issued to seasonal employers.
The ruling issued last night allows all PPP lenders to increase existing PPP loans to partnerships or seasonal employers to include appropriate amounts to cover partner compensation in accordance with the April 14 interim final rule or to permit the seasonal employer to calculate its maximum loan amount using the alternative criterion posted on April 28.
In addition, although the interim final rule on disbursements posted on April 28 requires PPP loans to be made in a single disbursement if a PPP loan that is increased has already been disbursed, this interim final rule authorizes the lender to make an additional disbursement of the increased loan proceeds prior to submission of the initial SBA Form 1502 that includes that loan.
For more information on PPP loans and navigating your business through the current crisis, please visit our COVID-19 resource center or join us on an upcoming free webinar. Recorded sessions are available on our YouTube channel.