SBA Issues PPP Guidance on Laid-off Employees Who Refuse to be Rehired
As published in the Journal of Accountancy:
Businesses that received Paycheck Protection Program (PPP) loans can exclude laid-off employees from loan forgiveness reduction calculations if the employees turn down a written offer to be rehired, according to new guidance from the U.S. Small Business Administration (SBA), which warned that employees who reject offers of reemployment may find themselves ineligible to continue receiving unemployment benefits.
The guidance was included among three new questions the SBA added over the weekend to a PPP frequently asked questions (FAQ) file it maintains in consultation with Treasury. The new guidance is included in FAQs 40–42. The first of the new questions asks if a borrower's PPP forgiveness amount would be reduced if the borrower lays off an employee and then offers to rehire the employee, but the employee declines the offer.
According the guidance, SBA and Treasury plan to issue a new rule excluding laid-off employees whom the borrower offered to rehire (for the same salary/wages and same number of hours) from the loan forgiveness reduction calculation spelled out in the $2 trillion Coronavirus Aid, Relief, and Economic Security (CARES) Act, P.L. 116-136, which authorized Treasury to create the PPP through the SBA's 7(a) lending system.
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