Must Read Alaska: PPP loans revised for Alaska’s seasonal businesses
A rule change released by the Treasury Department will allow Alaska’s hundreds of seasonal businesses to choose a different 12-week expense period when applying for a Paycheck Protection Program loan — a period that more accurately reflects their operating payroll.
The Alaska congressional delegation has pressed the Trump administration for weeks and has had multiple conversations with President Donald Trump and Treasury Secretary Steven Mnuchin, asking the federal government to issue guidance that accommodates seasonal employers devastated by the coronavirus pandemic. They finally got through to the bureaucrats that the PPP program was failing many Alaska businesses that only staff-up in the summer months.
“In Alaska, the summer tourism season doesn’t get going until late-Spring, and many seasonal businesses have few, if any, employees during the covered period to base payroll on for a PPP loan,” the Alaska delegation said in a statement. “These great local businesses, already hit with extreme disruptions to travel and tourism this year, were functionally shut out of the Paycheck Protection Program, even though they had employees that they were responsible for paying in May, as well as rent and utility payments due.
“We were not going to allow this vital sector of Alaska’s economy to slip through the cracks. We thank President Trump and Secretary Mnuchin for working with us to implement this commonsense fix that offers the flexibility seasonal employers need to fairly calculate their expenses, keep their businesses afloat, and their employees on the payroll.”
The PPP is a temporary program operated by the Small Business Administration and established by the CARES Act. It offers small businesses struggling from the economic down-turn access to low-interest loans to cover payroll and other expenses over an eight-week period.
But the way it was designed, the business’s loan amount was calculated based on a 12-week period beginning on Feb. 15 or March 1, 2019.
As a result, many businesses with little or no operations or expenses during that time of year found themselves eligible for only minimal PPP loan relief.
Under Treasury’s interim final rule, seasonal employers, such as tourism companies or guides, can choose any consecutive 12-week base payroll period between May 1 and Sept. 15, 2019 to determine their PPP loan amount.
Due to the urgency of the challenges facing seasonal employers, the Treasury Department has made the interim final rule effective immediately. The rule authorizes all lenders to use the alternate criterion when originating loans for seasonal employers.
The final day to apply for and receive a PPP loan remains June 30, 2020.
Source: Must Read Alaska