SS+D COVID-19 Response Team: Breaking News – SBA Provides Safe Harbor Relief for PPP Loans Under $2 Million

The Treasury and SBA just released new FAQ #46 stating: “[a]ny 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” (emphasis added). The news comes at the 11th hour before the SBA’s May 14th deadline for concerned borrowers to return PPP funds and should provide welcomed comfort for borrowers who received loans under $2 million.

Borrowers who received loans greater than $2 million still may be subject to scrutiny, but SBA provides some additional comfort, stating:

“[i]f SBA determines in the course of its review that a borrower lacked an adequate basis for the required certification concerning the necessity of the loan request, SBA will seek repayment of the outstanding PPP loan balance and will inform the lender that the borrower is not eligible for loan forgiveness. If the borrower repays the loan after receiving notification from SBA, SBA will not pursue administrative enforcement or referrals to other agencies based on its determination with respect to the certification concerning necessity of the loan request. SBA’s determination concerning the certification regarding the necessity of the loan request will not affect SBA’s loan guarantee.” (emphasis added)

If your company received more than $2 million in PPP funds, we have prepared a PPP Worksheet to assist you in compiling backup documentation to support your certification that PPP funds were “necessary.” If you’d like a copy of our worksheet, please contact the SS+D Attorney with whom you typically work or otherwise call us at 937-222-2500 and ask for a member of SS+D’s COVID-19 Response Team.

ABOUT THE SS+D COVID-19 RESPONSE TEAM
The SS+D COVID-19 Response Team was formed to provide clients, colleagues, and friends of the Firm updates for the foreseeable future on COVID-19 issues facing businesses, executives, and employees. Please let us know if there are any items/issues you would like for us to track or summarize.