May 1, 2020
The U.S. Small Business Administration issued another Interim Final Rule on Thursday, April 30, 2020 relating to the Payroll Protection Program under the CARES Act, entitled “Business Loan Program Temporary Changes; Paycheck Protection Program – Requirements – Corporate Groups and Non-Bank and Non-Insured Depository Institution Lenders.”
The Interim Final Rule limits the total amount of PPP loans available to a group of businesses majority owned, directly or indirectly, by a common parent to $20,000,000. According to the SBA:
“ … limiting the amount of PPP loans that a single corporate group may receive will promote the availability of PPP loans to the largest possible number of borrowers, consistent with the CARES Act. The Administrator has concluded that a limitation of $20,000,000 strikes an appropriate balance between broad availability of PPP loans and program resource constraints. SBA’s affiliation rules, which relate to an applicant’s eligibility for PPP loans, and any waiver of those rules under the CARES Act, continue to apply independent of this limitation. Businesses are subject to this limitation even if the businesses are eligible for the waiver-of affiliation provision under the CARES Act or are otherwise not considered to be affiliates under SBA’s affiliation rules.
Author: J. Michael Vaughn, Shareholder, Enterprise Counsel Group