Opportunity for Partnerships to Increase their PPP Loan|
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On May 13, 2020, the SBA released an Interim Final Rule on Loan Increases relating specifically to compensation of partners in a partnership.
Prior to clarification provided by the SBA on April 14, 2020 (Guidance on SBA Loans for Self-Employed) and on April 24, 2020 (Calculating Max Loan Amounts), it was expected that compensation to partners was not to be included in calculating the PPP loan amount. In fear of PPP funds exhausting quickly, many partnerships filed their applications as quickly as possible, which may have occurred prior to April 14, and therefore without partner compensation included in their calculations. The Interim Final Rule offers further options for “partnerships that received a PPP loan that did not include any compensation for its partners” on their application.
For partnerships that received a PPP loan and only included the partnership’s employees in the loan amount calculation, the SBA is providing the option for lenders to submit a request to the SBA to increase the PPP loan amount to include partner compensation. Although the previously issued Interim Final Rule on Disbursements (Interim Final Rule – Disbursements of PPP Proceeds) requires PPP loans to be disbursed in a single disbursement, this request allows the lender to make an additional disbursement.
Although an additional disbursement is allowed, the SBA specifically stated the maximum loan amounts still apply, including $10 million for an individual borrower or $20 million for a corporate group.
Let Aprio Help
We view this as very important for partnerships who applied for a PPP loan and did not include partner compensation as part of the loan amount calculation.
If you would like to discuss how to calculate partner income for the loan amount increase, or how to interpret and document spending requirements for PPP forgiveness with an SBA loan expert, contact Aprio here.