• Skip to primary navigation
  • Skip to main content
  • Skip to footer
716-633-1373 8321 Main Street, Williamsville, NY 14221
Tronconi Segarra & Associates

Tronconi Segarra & Associates

Williamsville, Buffalo & Western New York CPA

  • Client Toolkit
  • Request A Proposal
  • Pay Securely Online
  • Home
  • About
  • Our Team
  • Services
    • Accounting & Auditing
      • Financial Statement Auditing
      • Fraud/Forensic Accounting & Auditing
      • Internal Auditing
      • Performance Auditing
      • Governance Services
    • Tax Services
      • Business Taxation
      • U.S./Canadian Border Services
      • Cost Segregation Studies
      • Estates/Trusts/Private Foundations
      • Individual Taxation
      • International Tax
      • State & Local Tax
      • Exempt Organizations
      • Employee Benefit Plan Services
    • Small Business
      • Bookkeeping / General Ledger Services
      • Franchisee Services
      • Accounting for PPP, EIDL & Other COVID-19 Relief Programs
    • Outsourcing
    • State & Local Tax
      • Services – Manage Risk
        • Nexus Study
        • Registration
        • Voluntary Disclosure/Amnesty
        • Tax Research
        • Tax Compliance
        • Audit Defense
      • Services – Add Value
        • Refund Study
        • Utility Study
        • Credits & Incentives
        • Transaction Planning
        • Due Diligence
        • Outsourcing
      • Insights
    • Transaction Advisory Services (M&A)
    • International / Cross-Border
      • International Tax
    • Consulting Services
      • Executive Level Services
      • Litigation Support Services
      • Valuation Services
      • Succession Planning
    • Governmental Services
  • Industries Served
  • COVID-19
    • ERTC Assistance
    • COVID-19 Resource Center
      • CARES Act
      • Families First Coronavirus Response Act (FFCRA)
      • Coronavirus Preparedness and Response Supplemental Appropriations Act
    • COVID-19 Tax Relief
    • Unemployment Insurance Benefits
    • State & Local Grant and Aid Programs
    • COVID-19 Webinars
    • COVID-19 Blog Posts
    • Paycheck Protection Program: Forgiveness Calculation Services
  • Blog
  • Careers
  • Contact

SBA Issues New Rule on Loan Increases

May 14, 2020

On May 13, 2020, the U.S. Small Business Administration (“SBA”) posted a tenth Interim Final Rule on Loan Increases. This Interim Final Rule supplements the previously posted interim final rules by providing guidance on the ability to increase certain Paycheck Protection Program (“PPP”) loans for partnerships and seasonal employers due to additional guidance issued by SBA that was not available at the time these PPP loans were approved. The immediate effective date of this Interim Final Rule will benefit lenders so that they can swiftly close and disburse loans to small businesses.

  • On April 14, 2020, SBA posted an Interim Final Rule Additional Eligibility Criteria and Requirements for Certain Pledges of Loans that, among other things, provided guidance for individuals with self-employment income. The interim final rule stated, “if you are a partner in a partnership, you may not submit a separate PPP loan application for yourself as a self-employed individual. Instead, the self-employment income of general active partners may be reported as a payroll cost, up to $100,000 annualized, on a PPP loan application filed by or on behalf of the partnership.”
  • On April 28, 2020, the Department of the Treasury posted an Interim Final Rule on Additional Criterion for Seasonal Employers that provided an alternative criterion for calculating the maximum loan amount for PPP loans issued to seasonal employers.

Some PPP loans were approved to partnerships or seasonal employers before the additional guidance was issued and, as a result, those businesses may not have received PPP loans in the maximum amount for which they are eligible. This Interim Final Rule authorizes 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 interim final rule posted on April 14, 2020, or to permit the seasonal employer to calculate its maximum loan amount using the alternative criterion posted on April 28, 2020. This Interim Final Rule also authorizes lenders to make an additional disbursement of the increased loan proceeds prior to submission of the initial SBA Form 1502 that includes that loan.

Section 1(a). A partnership that received a PPP loan that only included amounts necessary for payroll costs of the partnership’s employees and other eligible operating expenses, but did not include any amount for partner compensation, may ask their lender to submit a request to increase the PPP loan amount to include appropriate partner compensation, even if the loan has been fully disbursed, provided that the lender’s first SBA Form 1502 report on the PPP loan has not been submitted.

Section 1(b). A seasonal employer that received a PPP loan before the alternative criterion for such employers was posted on April 28, 2020, who would be eligible for a higher maximum loan amount under the alternative criterion, may ask their lender to submit a request to increase the PPP loan amount, even if the loan has been fully disbursed, provided that the lender’s first SBA Form 1502 report to SBA on the PPP loan has not been submitted.

After the initial SBA Form 1502 report has been submitted to SBA, or after the date the initial SBA Form 1502 report was required to be submitted to SBA, the loan cannot be increased. In no event can the increased loan amount exceed the maximum loan amount allowed under the PPP Program, which is $10 million for an individual borrower or $20 million for a corporate group. Additionally, the borrower must provide the lender with required documentation to support the calculation of the increase.

Section 2. Notwithstanding the requirement set forth in the Interim Final Rule on Disbursements posted on April 28, 2020, if a PPP loan is increased under paragraphs 1(a) or (b) above, the lender may make a single additional disbursement of the increased loan proceeds prior to submission of the initial SBA Form 1502 report for that loan. The interim final rule posted on April 28, 2020 provided that lenders must submit the SBA Form 1502 information within 20-calendar days after a PPP loan is approved or, for loans approved before availability of the updated SBA Form 1502 reporting process, by May 18, 2020. This Interim Final Rule revises that date from May 18 to May 22, 2020. SBA may review at any time an increase submitted by the lender to confirm that the increase was submitted within the required timeframe. Increases submitted outside the required timeframe will not be forgiven, and no processing fee will be earned on such amounts. Additionally, lenders are not entitled to processing fees on increases submitted outside of the required timeframe.

Partnerships and seasonal employers that received their PPP loans prior to SBA posting new interim final rules on April 14, 2020 and April 28, 2020, should review the “average monthly payroll costs” used as the basis for their PPP loan request and determine whether they may be able to increase their loan amount based upon the new guidance in this new Interim Final Rule. If there is an opportunity to request an increase, borrowers should contact their lenders immediately to discuss the process for submitting this request, before the lender submits SBA Form 1502 and within the required timeframe discussed above.

*****

For additional information on the Paycheck Protection Program, as well as other Federal, state and local relief measures, please visit our COVID-19 Resource Center on our website. If you have any questions, please contact your Tronconi Segarra & Associates advisor or a member of our response team at

 

This website has been prepared for general guidance on matters of interest only; it does not constitute professional advice. You should not act upon the information contained in this website without obtaining specific professional advice. No representation or warranty (express or implied) is given as to the accuracy of completeness of the information contained in this publication; and, to the extent permitted by law, Tronconi Segarra & Associates LLP, its members, employees and agents do not accept or assume any liability, responsibility or duty of care for any consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this website or for any decision based on it.

Copyright 2020 Tronconi Segarra & Associates. All rights reserved.

 

Filed Under: CARES Act, COVID-19, News, Paycheck Protection Program

Contact Us

  • This field is for validation purposes and should be left unchanged.

Footer

Contact Information

Tronconi Segarra & Associates LLP
8321 Main Street
Williamsville, NY 14221
Phone: 716-633-1373
Fax: 716-633-1099

Ulrich City Centre
175 Walnut Street, Suite 2
Lockport, NY 14094
Phone: 716.438.2190
Fax: 716.438.2450

Contact Us

Links

  • Home
  • About
  • Services
  • Industries Served
  • Leadership Team
  • Blog
  • Careers
  • Contact

Copyright © 2023 Tronconi Segarra & Associates · Terms of Use · Privacy Policy · Site by OMA Comp