More PPP funds for Partnerships
The SBA has recently released a final interim rule which allows partners of a partnership to obtain additional PPP loan funds if the partners were not included in the original amount.
When the PPP loan program first went live the guidance was sparse. Many lenders allowed partnerships to include only W-2 employees as part of the calculation to determine the amount of a PPP loan the partnership could obtain. This left the compensation paid to partners out of the equation; for many partnerships, the compensation paid to partners could represent the lion’s share of ‘payroll’ to be included in the maximum PPP loan calculation. An April 14th interim rule prohibited partners in partnerships from submitting a separate PPP application for themselves as self-employed individuals, but instead, partnerships should include the partner compensation on the application. The partnerships that applied before the April 14 ruling or without knowing about the ruling had potentially left PPP money on the table.
The New Guidance
The new interim final rule allows partnerships to work with their lenders to increase the PPP loans to receive additional funds even if the original application has been approved and funds were disbursed. The new calculation can include the compensation of partners which includes the self-employment income of general active partners, up to $100,000 annualized. You can read the SBA guidance on how to calculate the amounts at question 4 here.
If you think you may be eligible for additional PPP funds you should contact your lender to find out their process for requesting an increase that included partner compensation. Be sure to check out some of our other PPP articles on the safe harbor and the treatment of PPP related expenses.
We are here to help. If you have questions or need additional help, call our office at 615-296-0500 and ask to speak with one of our managers or partners.