We recently alerted you to the SBA guidance which tightened eligibility rules on who qualifies for a PPP loan. You may recall that under the CARES Act, a borrower needed to certify that “current economic uncertainty makes this loan request necessary to support the ongoing operations of the applicant.”
A favorable SBA FAQ (#46) released on May 13 provides that any borrower who received a PPP loan of less than $2 million will be deemed to have made the required certification concerning the necessity of the loan in good faith. You can access the updated list of SBA FAQs here.
This welcome guidance should put many borrowers’ minds at ease as they will no longer be required to support their need for a loan.
Nothing has changed for borrowers of greater than $2 million. Their loan applications are still subject to review by the SBA for compliance on this issue. However, the SBA has clarified the consequences of a finding on the SBA’s part that the loan request was not necessary. Basically, the SBA will notify the lender that the loan may not be forgiven while also pursuing repayment. If the loan is repaid, the SBA promises not to pursue administrative enforcement or referrals to other government agencies.
According to new guidance in the form of SBA FAQ 47, the safe harbor provision for returning PPP loan proceeds has been extended from May 14 to May 18.
As always, reach out to your DunlapSLK team member with any questions you may have.