Fourth Interim Final Rule
The SBA issued a fourth Interim Final Rule regarding the PPP loan program over the weekend, which confirms some of the Q&As previously issued by the Treasury Department and provides some additional guidance on eligibility. In particular: (1) hedge funds and private equity firms are not eligible for PPP loans because they are primarily engaged in investment or speculation (and those types of businesses are ineligible to receive PPP loans); (2) companies owned by private equity funds are not de-facto ineligible, but are subject to the affiliation rules when calculating the number of employees for eligibility purposes; (3) hospitals that are otherwise eligible to receive a PPP loan are not ineligible due to ownership by a state or local government if the hospital receives less than 50% of funding from state or local government sources (exclusive of Medicaid); (4) a business’s participation in an ESOPs does not trigger affiliation between a business and the ESOP; (5) entities involved in bankruptcy proceedings are not eligible for PPP loans and applicants that become involved in bankruptcy proceedings after submitting an application but prior to receiving funds must notify their lender and request cancellation of the application.
Entities Involved in Legal Gaming
The SBA reversed a prior determination from its third interim final rule regarding entities involved in legal gaming activities. The SBA had previously determined that such entities were only eligible to receive PPP loans if they met the requirements of 13 CFR 120.110(g) (which puts limits on the amount of legal gaming revenue an eligible business can receive). In its fourth Interim Final Rule, the SBA reversed this decision and has stated that businesses that are otherwise eligible to receive PPP loans are not rendered ineligible because they receive legal gaming revenue and that the eligibility requirements set forth in 13 CFR 120.110(g) is inapplicable to PPP loans. Businesses that receive illegal gaming revenue remain categorically ineligible.
Updated FAQs
The Treasury Department continues to update its FAQs regarding the PPP loan program, and the most recent version (as of April 24, 2020) is available here: https://www.sba.gov/sites/default/files/2020-04/Paycheck-Protection-Program-Frequently-Asked-Questions_04%2024%2020.pdf.
This Client Alert is not a substitute for legal guidance regarding program details and how those may be applicable to your business. As always, if we can be of assistance during this difficult time, please do not hesitate to contact your HH&K attorney.
| Erica L. Lawson Partner 80 Exchange Street Binghamton, NY 13901 Phone: (607) 231-6907 Email: elawson@hhk.com |
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