PPP Loans and the New Loan Forgiveness Guidance

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Jason B. Freeman

Jason B. Freeman

Managing Member


Mr. Freeman is the founding member of Freeman Law, PLLC. He is a dual-credentialed attorney-CPA, author, law professor, and trial attorney.

Mr. Freeman has been named by Chambers & Partners as among the leading tax and litigation attorneys in the United States and to U.S. News and World Report’s Best Lawyers in America list. He is a former recipient of the American Bar Association’s “On the Rise – Top 40 Young Lawyers” in America award. Mr. Freeman was named the “Leading Tax Controversy Litigation Attorney of the Year” for the State of Texas for 2019 and 2020 by AI.

Mr. Freeman has been recognized multiple times by D Magazine, a D Magazine Partner service, as one of the Best Lawyers in Dallas, and as a Super Lawyer by Super Lawyers, a Thomson Reuters service. He has previously been recognized by Super Lawyers as a Top 100 Up-And-Coming Attorney in Texas.

Mr. Freeman currently serves as the chairman of the Texas Society of CPAs (TXCPA). He is a former chairman of the Dallas Society of CPAs (TXCPA-Dallas). Mr. Freeman also served multiple terms as the President of the North Texas chapter of the American Academy of Attorney-CPAs. He has been previously recognized as the Young CPA of the Year in the State of Texas (an award given to only one CPA in the state of Texas under 40).

Only two short months ago, Congress passed the Coronavirus Aid, Relief, and Economic Security Act or the CARES Act.  As many readers are aware, one of the many highpoints of the CARES Act was the Paycheck Protection Program (PPP).  Since its enactment, Freeman Law’s attorneys have extensively covered the PPP, including publishing the following PPP-related materials:

  1. CARES Act Guidance

II.  May 22, 2020 Interim Final Rules

On May 22, 2020, the SBA, in conjunction with the Treasury Department, issued two additional Interim Final Rules.  The first May 22, 2020, Interim Final Rule provides guidance to borrowers and lenders in preparing and submitting PPP loan forgiveness applications.  That Interim Final Rule can be found here.  The second May 22, 2020, Interim Final Rule provides guidance to borrowers and lenders regarding the SBA’s process for reviewing PPP loan applications and loan forgiveness application forms.  That Interim Final Rule can be found here.

A.  Borrower/Lender Guidance for Preparation and Submission of PPP Loan Forgiveness Applications

Some of the highpoints from the SBA/Treasury guidance is below:

  1. Loan Forgiveness Process
  1. Furloughed Employees, Bonuses, and Hazard Pay
  1. Caps on Loan Forgiveness for Owner-Employees and Self-Employed Individuals
  1. Advanced Payments of Interest on Mortgage Obligations
  1. Laid-Off Workers Who Decline Offers to Work
      1. The borrower made a good faith, written offer to rehire such employee (or, if applicable, restore the reduced hours of such employee) during the covered period or the alternative payroll covered period;
      2. The offer was for the same salary or wages and the same number of hours as earned by such employee in the last pay period prior to the separation or reduction in hours;
      3. The offer was rejected by such employee;
      4. The borrower has maintained records documenting the offer and its rejection; and
      5. The borrower informed the applicable state unemployment insurance office of such employee’s rejected offer of reemployment within 30 days of the employee’s rejection of the offer.
  1. Restoration of Employee Salaries or Wages or FTE Employees by June 30, 2020
  1. Employees Fired For Cause, Voluntary Resignations, or Voluntary Requests for Schedule Reductions

B.  SBA Review Procedures

Some of the highlights from the SBA/Treasury guidance is below:

  1. When will SBA Review a PPP Loan Forgiveness Application?
  1. Will I Have an Opportunity to Respond to SBA’s Questions in a Review?
  1. If SBA Determines that a Borrower is Ineligible for a PPP Loan, Can the Loan be Forgiven?
    • No.  If SBA determines that a borrower is ineligible for the PPP loan, SBA will direct the lender to deny the loan forgiveness application.  Further, if SBA determines that the borrower is ineligible for the loan amount or loan forgiveness amount claimed by the borrower, SBA will direct the lender to deny the loan forgiveness application in whole or in part.  SBA may also seek repayment of the outstanding PPP loan balance or pursue other available remedies.
  2. May a Borrower Appeal SBA’s Determination that the Borrower is Ineligible for a PPP Loan or Ineligible for the Loan Amount or the Loan Forgiveness Amount Claimed by the Borrower?


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