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CARES Act – Client Alert – Seasonal Employers

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CLIENT UPDATE: Treasury announced today an interim final rule concerning an alternative criterion for calculating the maximum PPP loan amount issued to seasonal employers.

            The rule announced today addresses the needs of certain potential PPP loan borrowers that are seasonal employers by permitting them to use an alternative base period to calculate the loan amount for which they are eligible under the PPP. 

            Because Section 1102 of the CARES Act permits 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,” many seasonal employers – particularly summer seasonal businesses – were unable to obtain appropriate PPP loan funding for their particular businesses as compared to other seasonal (such as spring) businesses. 

            Accordingly, and to remedy this disparity, the new rule permits a seasonal employer the option to elect to determine its maximum PPP loan amount as the average total monthly payments for payroll during any consecutive 12-week period between May 1, 2019 and September 15, 2019. No other changes to PPP loans were made with respect to seasonal employers.

            The entire rule is available at: https://home.treasury.gov/system/files/136/Interim-Final-Rule-Additional-Criterion-for-Seasonal-Employers.pdf.

As always, Wadleigh’s COVID-19 Response Team will continue to monitor this situation closely and provide updates as needed.