While the blitz of new PPP information has slowed substantially over the past few months, there has been some important new guidance released over this past week. Here are some highlights.
Changes in Ownership for PPP Borrowers
An SBA Procedural Notice was issued on Friday, October 2nd regarding changes in ownership for PPP loan recipients. Per the notice, a change in ownership takes place when at least one of the following occurs:
- At least 20% of the common stock or other ownership interest of a PPP borrower is sold or otherwise transferred, whether in one or more transactions, including to an affiliate or an existing owner of the entity;
- The PPP borrower sells or otherwise transfers at least 50% of its assets (measured by fair market value), whether in one or more transactions; or
- A PPP borrower is merged with or into another entity.
Regardless of a change in ownership, the PPP borrower remains responsible for all of the following:
- Performance of all obligations under the PPP loan;
- The certifications made in connection with the PPP loan application, including the certification of economic necessity;
- Compliance with all other applicable PPP requirements;
- Obtaining, preparing, and retaining all required PPP forms and supporting documentation; and
- Providing the required forms and supporting documentation to the PPP lender or lender servicing the PPP loan, or to the SBA upon request.
The notice also addresses when a PPP borrower must notify their lender of any change in ownership and the timeline for the lender to notify the SBA of such changes. Guidance is provided for whether or not the loan has been fully forgiven and whether the new owners had a separate PPP loan.
Loan Payment Deferral Period
On Wednesday, October 7th, FAQ #52 was released addressing the extended deferral period for loan repayment. The Paycheck Protection Program Flexibility Act, put in place on June 5th, extended the loan repayment to the date that the SBA remits the amount of loan forgiveness to your lender OR 10 months after the borrower’s loan forgiveness covered period. The extended deferral period automatically applies to all PPP loans. Lenders are required to notify borrowers of the change to the deferral period but do not need to modify the promissory note. If you have received a notification from your lender that payments are due, please reach out to them to discuss the extended deferral period.
Wegner CPAs Can Help!
Wegner CPAs is happy to assist our clients through this arduous process. We have put together a dedicated team that is up to date on the important guidelines and completion of the forgiveness application. Please reach out to your relationship manager if you are interested in having our team assist you.