SBA Issues Additional Guidance on Loan Certification

On May 13th, the SBA issued additional guidance on how it intends to review the good faith necessity certification for PPP loans to the FAQ document published on its website.

This information was much needed and has helped calm the fears of many business owners extremely worried that their determination of need would be unfairly challenged by SBA officials “after the fact”.  The update significantly softens the language previously issued by the SBA.

Simply interpreted, FAQ #46 states the following:

• Borrowers who received Paycheck Protection Program (PPP) loans of less than $2 million are generally presumed to have made the certification in good faith.
• Borrowers who are above the $2 million threshold will have a review of their forgiveness applications by the SBA. However, if forgiveness is ultimately denied by the SBA, such businesses will not be subject to any criminal or other penalties, as long as the loan is repaid after the SBA’s determination.

Also added to the FAQ is question #47, which states, “An SBA interim final rule posted on May 8, 2020 provided that any borrower who applied for a PPP loan and repays the loan in full by May 14, 2020 will be deemed by SBA to have made the required certification concerning the necessity of the loan request in good faith. Is it possible for a borrower to obtain an extension of the May 14, 2020 repayment date?”

The answer: “Yes, SBA is extending the repayment date for this safe harbor to May 18, 2020, to give borrowers an opportunity to review and consider FAQ #46.  Borrowers do not need to apply for this extension. This extension will be promptly implemented through a revision to the SBA’s interim final rule providing the safe harbor.”

Click here to download the full FAQ. If you received a PPP loan and want assistance analyzing your situation, please contact your Mize CPAs professional.

This content was created during a snapshot in time and should be relied upon as such. Legislation and guidance continue to change as we progress through the current fluid environment and the information may not be applicable at a later date.  All content and materials are for general information purposes only. If you have questions regarding your specific situation, please contact us.