Today, the SBA and Department of the Treasury updated its FAQ, announced a modification on its stance concerning “good-faith” certifications in obtaining a PPP loan, and its retention beyond the May 14 safe-harbor payback date, that most borrowers will find to be favorable. Released as FAQ #46 (attached here), the SBA has issued the following guidance with respect to the borrower and its affiliates, if any:
Aggregated PPP loans under $2 million
“Any borrower that, together with its affiliates, received PPP loans with an original principal amount of less than $2 million will be deemed to have made the required certification concerning the necessity of the loan request in good faith.”
The SBA deemed the $2 million threshold appropriate as those borrowers with loans less than $2 million to be less able to access other adequate sources of liquidity.
Aggregated PPP loans over $2 million
“[B]orrowers with loans greater than $2 million that do not satisfy this safe harbor may still have an adequate basis for making the required good-faith certification, based on their individual circumstances in light of the language of the certification and SBA guidance.”
Borrowers, and their respective affiliates, if any, that have requested, in aggregate, $2 million or more of PPP loans will be subject to SBA review. If upon review, the SBA determines that a borrower failed to substantiate an adequate basis in making the “good-faith” certification, the SBA will seek repayment of the outstanding PPP loan balance and eliminate the forgiveness on any expenses paid. If the borrower’s repayment is made, following the SBA’s determination on inadequate basis, the SBA will not pursue further administrative or legal enforcement.
As always, if you have any questions, please contact us.