April 24, 2020
Treasury Updates FAQs On PPP
The Treasury updated its
frequently asked questions on the Paycheck Protection Program. Questions address the following.
- Does the cost of a housing stipend or allowance provided to an employee as part of compensation count toward payroll costs?
- Is there existing guidance to help PPP applicants and lenders determine whether an individual employee’s principal place of residence is in the United States?
- Are agricultural producers, farmers, and ranchers eligible for PPP loans?
- Are agricultural and other forms of cooperatives eligible to receive PPP loans?
New SBA Rule Clarifies PPP Borrower Eligibility
The Small Business Administration today issued an
interim final rule clarifying several issues around borrower eligibility for the Paycheck Protection Program, as well as incorporating several previously issued FAQs.
Under the rule, hedge funds and private equity firms are ineligible for PPP loans, and SBA affiliation rules apply to companies held in private equity portfolios, SBA said. SBA added that PE portfolio firms should “carefully review” the PPP borrower certification on their economic needs.
The rule also clarified that a business with an employee stock ownership plan does not trigger the affiliation rules and that firms in bankruptcy proceedings at any point before funds are disbursed are ineligible for the PPP.
The rule, which took effect today, also formalized previous FAQ guidance on promissory notes, SBA authorization forms and a safe harbor for PPP borrowers who had access to capital market funding provided they return funds by May 7.
Fed To Suspend Six-Withdrawal Limit On Transfers From Savings Accounts
The Federal Reserve
announced it would provide relief from the six-per-month limit on transfers or withdrawals from savings accounts under Regulation D, effective immediately. This action is intended to grant more flexibility to consumers to access their savings deposits at a time when many are facing financial hardships because of the coronavirus pandemic.
The Fed noted that its recent action reducing all reserve requirement ratios to zero has eliminated the need to distinguish between reservable “transaction accounts” and nonreservable “savings deposits.” The Fed also made corresponding updates to the Call Report to reflect these changes.
Webinar Focuses On Returning To Work After Coronavirus
With attention now shifting to how organizations will safely reopen as pandemic-related restrictions begin to ease, the American Bankers Association will host a joint
webinar with several financial trade associations and the Financial Services Information Sharing and Analysis Center to discuss best practices. The webinar is 9 a.m. Wednesday, April 29.
The webinar will address cybersecurity challenges related to the coronavirus, restarting workplace operations after an extended absence, supporting the needs of employees and continuing business operations in an environment of uncertainty.
ABA, Consumer Group Ask FCC To Provide Immediate Relief To Facilitate COVID-19-Related Calls
As banks seek to contact customers with COVID-19-related information, the American Bankers Association and the National Consumer Law Center
urged the Federal Communications Commission to act immediately on a
petition filed by ABA and six financial trade groups seeking an expedited ruling on the exempt status of these calls.
The National Consumer Law Center offered its support for the FCC to confirm the exempt status of financial institutions’ COVID-19-related calls to offer forbearance, payment deferrals, fee waivers, extension or relaxation of repayment terms, or loan modifications on loans secured by homes or vehicles, with limits on the number of exempted calls that may be placed.
“Both the financial trade associations and the consumer representatives agree regarding the importance of some of the calls specified in the ABA’s petition, given the emergency conditions present during the COVID-19 pandemic, and that the value of these calls will diminish if the FCC does not provide relief until after the comment period ends,” ABA and NCLC said in a communication to the FCC.
IRS Issues 88 Million Economic Impact Payments As Of April 17
A total of 88 million Americans received economic impact payments totaling $158 billion within the first three weeks of the program, the IRS
reported.
The IRS, which is expected to deliver a total of more than 150 million EIPs to individuals and households, also issued a state-by-state breakdown of the number and value of payments issued. In Missouri, there have been more than 1.7 million EIP payments totaling more than $3.2 billion.
The IRS also has published a series of
frequently asked questions on a range of topics including eligibility, how to request an EIP, how EIPs are calculated, receiving payments and more.
As EIPs are disbursed, the American Bankers Association is working to help unbanked consumers open bank accounts so they can receive their CARES Act payments electronically. The association recently unveiled a new
webpage where consumers can find a partial list of institutions offering accounts that can be opened online and funded with an EIP.
AICPA Issues Recommendations for PPP Agent Relationships
The American Institute of CPAs
issued recommendations aimed at a common understanding of how accountants can serve as agents for purposes of the PPP. Specifically, AICPA recommended that the accountant for a small business applying for a PPP loan “contact the lender prior to offering assistance and performing advisory work to the client. This will ensure the lender has agreed to compensate the CPA firm for its service.”
AICPA also recommended that should the lender agree to pay an agency fee to the CPA firm, as allowed for by the CARES Act, that the relationship be documented and disclosed to the applicant. “Documentation could take the form of a letter, sent by the CPA to his/her client, that describes the services to be performed by the CPA firm to assist and advise the client on the appropriate completion of the application,” AICPA said.
The recommendations come as lenders and CPA firms have sought clarity regarding how agent relationships should be documented and how fees should be paid if agreed to.