Last night, the U.S. Small Business Administration issued its Interim Final Rule for the Paycheck Protection Program (PPP). A few key takeaways:
The interest rate on PPP loans has been increased to 1% (up from .5%).
Loans will be issued on a “first-come first serve” basis.
- The Interim Final Rule clarifies how loan proceeds are to be utilized. Borrowers are expected to use 75% of loan proceeds on eligible payroll costs during the eight-week loan forgiveness period. The same requirement now also applies to use of remaining loan proceeds. This is a significant change—the legislation as written would have permitted borrowers to utilize the balance of the loan proceeds more broadly. It will be important for borrowers to accurately track all uses of loan proceeds, as there are penalties, both to the borrower and its individual owners for unauthorized use of PPP loan funds.