SBA: Workers who choose to remain unemployed will not affect PPP loan cancellation

Business owners looking for potentially recoverable loans under the federal paycheck protection program now have some clarity on an area of ​​”major concern.”

Seen as a major flaw in the program, which depends on employers maintaining their workforce, many workers found they could make more money with improved unemployment benefits of over $ 900 per month. than on the salary offered by their usual employer. But the US Small Business Administration said over the weekend that employers who make a “good faith” effort to rehire staff will not have their pardon reduced if they are unable to do so.

“The provisional final rule will specify that, in order to benefit from this exception, the borrower must have made a written offer to rehire in good faith, and the rejection of this offer by the employee must be documented by the borrower,” said the borrower. updated SBA guideline.

In addition, the SBA guidelines state that “employees who reject offers of re-employment may lose their eligibility for continuing unemployment compensation.”

James Lopiccolo, a managing member of the accounting firm Capocore Professional Advisors in Lake Orion, notes that there are two steps to canceling PPP loans: calculating what is eligible and reductions based on salaries and staff.

“(The SBA) said that employees who are rehired and choose not to come back are not going against this reduction calculation, so they will not reduce the pardon,” Lopiccolo said in a webinar Monday. organized by the Small Business Administration. from Michigan.

He added that he recommended that companies document their efforts to offer a job, and for workers who refuse, business owners have a “responsibility” to speak with the employment agency.

The updated guidelines, however, raise some questions for Brett Miller, shareholder and chairman of the employment practice at Butzel Long’s Detroit office.

“It’s still unclear what happens if a large number of employees refuse to return to work,” Miller wrote in an email to Crain’s. “This could still be a problem in industries where employees earn more when they are unemployed than they are when they are working.”

Rob Scott, regional administrator for the SBA’s Great Lakes office, said the updated guidelines respond to concerns expressed directly by small business owners.

Speaking to reporters on Tuesday, Scott said given the scope of the legislation, it was impossible to see every situation that could arise. Sunday’s update was the “first step” in fixing some of the issues.

“There is going to be some additional advice,” Scott said.

In the two rounds of PPP funding since early April, Michigan companies have received nearly 104,000 loans totaling nearly $ 16 billion, as Crain’s reported.

Scott told reporters on Tuesday that about $ 130 billion was still left from the $ 310 billion second credit. The money is starting to last longer because the average loan size – $ 79,000 as of May 1 – continues to decline.

“We’re not going through funds that quickly, but we’re reaching more companies,” Scott said. “Because there are smaller loan amounts, the money goes further.”

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