With the $350 billion fund allocated by Congress for the Paycheck Protection Program (“PPP”) exhausted, we are currently waiting to see if and when the PPP funding is extended. Amid these reports, the U.S. Treasury Department issued a second, supplemental Interim Final Rule (the “Second Rule”) that provides further guidance on the PPP loan program.
The Second Rule concerns, in main part, special PPP loan application procedures for independent contractors and sole proprietors. However, buried in the Second Rule is a tangential discussion that provides important guidelines relevant to Limited Liability Companies and Partnerships. Specifically, the Second Rule instructs that K-1 distributions to LLC members and partnership partners, relating to employment activities of those members and partners, constitute Payroll Costs for purposes of PPP loan amount calculation procedures.
Read our latest COVID-19 Alert for more information on the Second Rule .