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Seasonal Employers Allowed Greater Access to PPP Funding

On March 27, 2020, the President signed the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) into law. The CARES Act established the Paycheck Protection Program (“PPP”), which is designed to provide loans to small businesses to withstand the economic turbulence created by the Coronavirus. The PPP was recently renewed with $310 billion in additional funding.

Section 1109 of the CARES Act authorizes the U.S. Department of Treasury to issue regulations that allow lenders to originate PPP loans under terms and conditions established by the Treasury. Recently, Treasury adopted a rule to address the needs of certain summer seasonal employers who were unable to obtain funding commensurate with the ability of winter and spring seasonal employers.

As enacted, Section 1102 of the CARES Act permitted seasonal employers to calculate their maximum loan amount by using their monthly average payments for payroll during “the 12-week period beginning February 15, 2019, or at the election of the eligible [borrower], March 1, 2019, and ending June 30, 2019.” This Section created issues for summer seasonal employers who were not fully operational during this period of time. This created disparity for employers who may now need the loans, but because of their season, were unable to obtain the appropriate level of funding.

Treasury’s rule provides seasonal employers the option of using any consecutive 12-week period between May 1, 2019 and September 15, 2019 for determining its maximum loan amount. The rule addresses the disparity between summer employers and winter and spring employers and ensures consistency in the PPP’s administration by granting seasonal employers additional flexibility in choosing their base periods.

Under this rule, seasonal employers who were not in operation as of February 15, 2020 will be eligible for PPP loans if the employer was in operation for any 8-week period between May 1, 2019 and September 15, 2019.

Other than the adjustment to the base period selection, the terms and requirements applicable to PPP remain the same. As a result, a seasonal employer that elects to use the alternative timing criterion may follow the same processes and procedures applicable to other PPP loans.

The rule is effective immediately.

Logan Stevens



This advisory has been prepared by Carson LLP for informational purposes only and does not constitute legal advice. Copyright 2020, Carson LLP, 301 W. Jefferson Blvd. STE 200, Fort Wayne, Indiana, 46802. All rights reserved. Date of Advisory 4/27/2020.