On May 14th, the SBA issued additional guidance regarding the enforcement of the “good faith” certification contained in the application for a loan under the Payroll Protection Program. The SBA has determined that any Borrower, who together with its affiliates, received a PPP loans in the principal amount of less than $2 million will be deemed to have made the certification concerning the necessity of the loan request in good faith.
In addition, the SBA has previously indicated that any borrower who received PPP loans in excess of $2 million will be subject to audit. Today’s guidance provides that if upon audit, the SBA determines that the Borrower lacked an adequate basis for the “good faith” certification, the SBA will seek repayment of the PPP loan and will prevent forgiveness of the PPP loan. If the PPP loan is repaid, the SBA will not pursue administrative enforcement or referrals to other agencies.
This guidance was issued today as borrowers, lenders, Senators and Congressmen sought clarification from the SBA on the definition concerning the certification regarding necessity associated with the PPP loan application. Previously the SBA had set May 14 as the deadline for the repayment for any PPP loan from borrowers who were concerned that they might be found not to have had an “adequate basis” for determining the necessity for the PPP loan. That deadline remains in place, but today’s guidance set forth in the response to Question 46 in the link below to the Frequently Asked Questions provides further guidance for PPP borrowers.
Should you have questions on the PPP loan program, please contact one of the attorneys in the Business Practice Group.
Click the button below for the link to download the FAQs on Payment Protection loans.