Recent PPP Loan Changes Provide Significant Benefits to Camps

May 24, 2020

The US Department of Treasury has taken steps to correct a disparity in the Paycheck Protection Program’s (PPP) that penalized businesses with a peak season during the summer— camps included — in determining the loan amount they can request.

Section 1102 of the PPP 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, if the borrower chooses, beginning March 1, 2019, and ending June 30, 2019. However, many camps and other seasonal employers have seasons that occur later in the year. The Treasury found, “Without the ability to use an alternative base period, many summer seasonal businesses would be unable to obtain funding on terms commensurate with those available to winter and spring seasonal businesses” (US Department of the Treasury, 2020).

Therefore, on April 27, 2020, the Treasury issued an interim final rule allowing seasonal borrowers to use an alternative base period to calculate the loan amount for which they are eligible under the PPP (US Department of the Treasury, 2020b). This interim final rule ensures consistency in program administration by providing a seasonal employer the opportunity to use any consecutive 12-week period between May 1, 2019, and September 15, 2019, to determine their maximum loan amount.

Seasonal employers who meet all other Small Business Administration criteria and use the alternative base period to calculate their average payroll needs will be eligible for a PPP loan, according to the Treasury. “Instead of following the instructions on page 3 of the Borrower Application Form for the time period for calculating average monthly payroll for seasonal businesses, an applicant may elect to use the time period in Treasury’s interim final rule on seasonal workers” (US Department of Treasury, 2020b).

Businesses that have already been approved for a PPP loan may use a simplified Loan Amendment Application to recalculate their maximum loan amount. In some cases, the result is a significant adjustment in the maximum loan amount, providing further assistance to camps in need.

The Treasury added, “This interim final rule ensures that seasonal employers affected by the pandemic are treated even-handedly” (US Department of Treasury, 2020).

The US House of Representatives has been called back into session this week. Further adjustments to the PPP loan program are currently on the agenda, including the potential to extend the eight-week covered period and to adjust the requirements to calculate the forgivability of the loan.