The U.S. Department of the Treasury issued updated PPP FAQs on May 3, 2020 (the “FAQs”) addressing the impact of layoffs on loan forgiveness. An open question has been whether a borrower will be impacted if the borrower laid off an employee, offered to rehire that employee and the employee declined. The FAQs make it clear that the SBA and Treasury intend to issue an interim final rule addressing the question in detail, which will exclude from the loan forgiveness reduction laid-off employees whom the borrower offered to rehire. The interim final rule “will specify that, to qualify for this exception, the borrower must have made a good faith, written offer of rehire, and the employee’s rejection of that offer must be documented by the borrower.” The FAQ also states that “employees who reject offers of re-employment may forfeit eligibility for continued unemployment compensation.”

The updated FAQs also address seasonal employers’ ability to make the borrower certifications. Further, the FAQ states that nonprofit hospitals exempt from taxation under section 115 of the Internal Revenue Code will be treated as nonprofits for purposes of the Paycheck Protection Program if the hospital reasonably determines that it is an organization described in section 501(c)(3) of the Internal Revenue Code.

See the full text of the FAQs here.