Important Payroll Protection Program (“PPP”) Loan Update
We anticipate that the coronavirus has completely altered the ways we conduct business. And we see evidence that the IRS has changed our tax scenarios - in many ways, in a positive direction. However, some changes will likely have negative impacts.
One such area is in regard to the Payroll Protection Program (PPP). Some borrowers have discovered that the PPP loan they received come with greater scrutiny and disclosure of how the borrowed funds are to be used and who is receiving the benefits. Many private investment funds have found that if they are to keep the loan proceeds and use them to pay certain payroll and other expenses, the fund will also be required to divulge some of their limited partners' personal information. Most private equity funds would rather not expose such information to the government during a “necessity of the loan request” and would thus need to return the PPP loan proceeds or risk default on the loan.
Any Borrower with concerns as to a “necessity of the loan request” from the government will be given until May 18, 2020 to repay their PPP loan. That deadline was originally May 14, 2020, but has now been extended to May 18. No Borrower needs to apply for the extension.
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