The Small Business Administration

The Small Business Administration (SBA) released a new interim rule late on April 14th stipulating that a partner in a partnership cannot submit a separate application for a PPP loan as a self-employed individual. Click Here to Read NEW SBA Interim Rule on Partnerships & PPP Loans While Partnerships are in fact eligible for PPP loans and are encouraged to apply, the Treasury Department and SBA have decided to limit a partnership and its partners to one PPP loan to avoid confusion and help ensure as many borrowers as possible get loans before the deadline expires on June 30. This sentiment is expressly stated in the new rule, “This limitation will allow lenders to more quickly process applications and lower the burden of applying for partnerships/partners.” By the close of business on April 14, SBA announced 1.01 million small business had been approved for PPP loans totaling $242 billion. The new guidance further states that the self-employment income of partners in a partnership may be reported as a payroll cost, up to $100,000 annualized, on a PPP loan application filed by or on behalf of the partnership (or LLC filing taxes as a partnership). However, this new rule isn’t without controversy. Since the release yesterday evening, there are some in the tax and accounting industry who are already concerned that this rule may be going against the previously held IRS position that partners are self-employed individuals and not employees of the partnership. The new rule also provides maximum loan amount calculations and specifies the required documentation needed for individuals with self-employment income. Guidance is also provided on how PPP loans may be used, specific restrictions, and how loan forgiveness will be considered and calculated. Finally, NSA received a link to the Treasury Department’s newly released FAQs on the PPP Loans. Please read the PPP Loan FAQ for additional information.