Title I of the CARES Act justified PPP under a new section 7 (a) (36) of the Small Business Act of 1953 (the Small Business Act). Ppp was subsequently extended by the Paycheck Protection Program and Health Care Enhancement Act, which came into effect on April 24, 2020 and was extended by the Paycheck Protection Program Flexibility Act , which came into effect on June 5, 2020. Since ppp is a loan program under Section 7 (a) of the Small Business Act, it is subject to the rules applicable to commercial credits in Section 7 (a) of the SBA, unless the CARES Act or the applicable rules otherwise provide for it. Section 7 (a) Loan plans are generally located in 13 C.F.R.part 120. PPP is also subject to SBA affiliate rules in 13 C.F.R. Borrowers are generally required to file pfPP loan applications on the EZ forgiveness application: However, the repayment of the loan under FAQ 46 does not protect the borrower from potential liability. FaQ 46 simply states that the SBA will not take additional action based on the finding that the borrower did not have an adequate basis for certification of needs. The SBA could continue to address other violations of P3 status or enforcement arrangements. Other government authorities and whistleblowers could also apply to be implemented as part of their respective court applications. For example, FAQ 46 would not prevent the government or a whistleblower who believes that the borrower deliberately misrepresented his P3 credit application, knowing that it was false, to file or investigate a complaint under the False Claims Act.
The applicant should be the company that employs staff and spends the proceeds of the P3 loan for authorized purposes. Where an applicant for renouncement of affiliation relies on SBIC funding (see C.5 above), the applicant should be a direct beneficiary of the SBIC funding. SBA did not provide guidelines on whether holding companies could apply for PPP loans and distribute PPP loan products to their subsidiaries. Some borrowers and lenders prefer to have a holding company as a plaintiff. If the applicant is a holding company, it should disclose it and disclose the subsidiaries that will use the revenues on addendum A. We also recommend that applicants considering a holding company discuss this with the lender before applying for a PPP loan. SBA offers two alternative methods for calculating the number of ETP employees. One method is to calculate the average weekly working time of each employee during the reporting period, to be divided by 40 and to be rounded to the next tenth. Under this method, no employee can exceed 1.0 FTE. Alternatively, employers can use 1.0 for each paid worker for 40 hours or more per week and 0.5 for workers paid for less than 40 hours per week. A borrower must choose one of these methods and apply it to all employees.  Also keep in mind the potential ETP additives described in E.25.
When a borrower uses the proceeds of the KKP loan for unauthorized purposes, the SBA requires repayment of these revenues. It is not clear when a refund would be required. When a borrower knowingly uses ppp loans for unauthorized purposes, he or she is subject to additional liability, for example.B. If a borrower`s shareholder, member or partner uses pPP loans for unauthorized purposes, SBA will act against that shareholder, member or partner.  The SBA has also released the application form for lenders, which must be submitted to each PPP loan application to apply for the SBA guarantee. The lender application contains a question that may support the position that lenders are only required to share loan fees when the lender has called in the agent. But this is by no means definitive. In addition, an application form does not have the legal value of a status or rule.