Recent Updates to the Paycheck Protection Program (“PPP”)

There is finally some good news for owners of hotels and restaurants trying to navigate their way through the PPP. On Sunday, May 3, 2020, the SBA published revised PPP FAQs. Among several other new additions to such document, the SBA added the following new Q&A, which we believe will be beneficial to the hospitality industry:

Question: Will a borrower’s PPP loan forgiveness amount (pursuant to section 1106 of the CARES Act and SBA’s implementing rules and guidance) be reduced if the borrower laid off an employee, offered to rehire the same employee, but the employee declined the offer?

Answer: No. As an exercise of the Administrator’s and the Secretary’s authority under Section 1106(d)(6) of the CARES Act to prescribe regulations granting de minimis exemptions from the Act’s limits on loan forgiveness, SBA and Treasury intend to issue an interim final rule excluding laid-off employees whom the borrower offered to rehire (for the same salary/wages and the same number of hours) from the CARES Act’s loan forgiveness reduction calculation. The interim final rule will specify that to qualify for this exception, the borrower must have made a good faith, written offer of rehire, and the employee’s rejection of that offer must be documented by the borrower. Employees and employers should be aware that employees who reject offers of re-employment may forfeit eligibility for continued unemployment compensation.

Throughout the COVID-19 crisis, the Hospitality Practice Group at Sherin and Lodgen LLP will continue to monitor the PPP and other new laws and regulations of interest to the hospitality industry and provide updates as frequently as possible.