New Paycheck Protection Program Guidance Allays Borrower Concerns
On Wednesday, May 13, the Small Business Administration (SBA), in conjunction with the United States Treasury Department, issued additional guidance on the Paycheck Protection Program (PPP) which should alleviate ongoing concerns of multifamily borrowers. In light of recent bad press and confusion as to eligibility criteria, PPP borrowers are evaluating whether to return the funds and remain troubled by the possibility of loan audits, through no fault of their own.
Under Question 46, the new guidance states:
Any borrower that, together with its affiliates, received PPP loans with an original principal amount of less than $2 million will be deemed to have made the required certification concerning the necessity of the loan request in good faith.
SBA has determined that this safe harbor is appropriate because borrowers with loans below this threshold are generally less likely to have had access to adequate sources of liquidity in the current economic environment than borrowers that obtained larger loans.
In addition, the SBA and Treasury have extended their deadline for businesses wishing to return their PPP loan, under Question 47, to May 18. This extension will allow businesses to consider recent guidance and its application to particular scenarios.
On Friday, May 15, the SBA also released its PPP Loan Forgiveness Application which defines the procedure by which borrowers are able to realize the total forgiveness of their loans. Notably, the application clarifies concerns surrounding the re-hiring of employees. Under the application's guidance, employees that were fired with cause, resigned voluntarily, or voluntarily requested and received a reduction in hours or wages will not impact the employee headcount. Therfore, they will not reduce the forgiveness applicable to a PPP loan.
The National Apartment Association (NAA) welcomes the recent SBA and Treasury guidance and the relief that it provides some rental housing providers as they analyze their paths forward.
Still, housing providers remain largely excluded from eligibility criteria for the PPP despite Congressional intent to serve the needs of all businesses facing financial hardship. Due to the ongoing crisis, the rental housing industry struggles to provide housing and continuity of essential services to millions of Americans who remain sheltered in place. Like other businesses, rental housing professionals will be forced to make the difficult choices that affect the quality and affordability of housing as renters become increasingly hard-pressed to meet their rental payment responsibilities. It is more important than ever that these businesses receive equal consideration under the provisions of the CARES Act and the PPP. To achieve this:
- Congress must compel the SBA to revise its lending criteria for the PPP to include all multifamily firms. This expansion of eligible entities would shore up the nearly 17.5 million jobs supported by the rental housing industry.
- Congress must amend the CARES Act to include multifamily firms under the provision granting PPP eligibility to business with more than 500 employees operating across multiple physical locations. Many multifamily businesses operate under the same business model as those industries already included under this provision.
NAA continues to work diligently with federal lawmakers and regulators to ensure that the unique needs of the rental housing industry are understood and met. For more information on PPP related advocacy issues, please contact Sam Gilboard, NAA Manager of Public Policy.
For more information on COVID-19 related advocacy issues, please visit our COVID-19 Policy Concerns page. For multifamily operation and compliance assistance, please visit our COVID-19 Resource and Guidance Center.