Earlier this week, the Small Business Administration (SBA) issued Interim Final Rule – Revisions to Loan Forgiveness Interim Final Rule and SBA Loan Review Procedures Interim Final Rule. This Interim Final Rule included additional guidance relating to loan forgiveness of Paycheck Protection Program (PPP) loans, including the following:

• Allows a borrower to file before the end of the applicable covered period if the borrower has used all of the loan proceeds for which the borrower is requesting forgiveness
  • If there are reductions of salaries or wages in excess of 25 percent during the applicable covered period, the borrower must account for the excess reduction through the end of the applicable covered period
    • Safe harbor to restore salaries and wages by date of application remain

• Clarifies that deferral of interest and principal ends if the SBA determines that the loan is not eligible for forgiveness (in whole or in part)
  • Requires payment of principal and interest
  • Lender is required to notify the borrower of the date of the first payment

• Limits forgiveness amount available for owner-employees and self-employed individuals' own payroll compensation.
  • For borrowers who use a 24-week covered period, forgiveness for owner-employees’ payroll compensation is capped at the lower of 2.5 months’ worth of 2019 compensation or $20,833

• Extends exemption from forgiveness reduction arising from a reduction in the number of FTEs due to compliance requirements established or guidance issued between March 1, 2020 and December 31, 2020 by the CDC, HHS or OSHA to state or local government shutdown orders that are based on such guidance