Section 2 of FOS’s FURTHER GUIDANCE ON PAYCHECK PROTECTION PROGRAM describes the recent guidance provided by the Small Business Administration (“SBA”) regarding, among other things, the certifications required to be made by companies obtaining loans (“PPP Loans”) under the Paycheck Protection Program (“PPP”).
That guidance recommended particular vigilance regarding a borrower’s required good faith certification that “[c]urrent economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant.”
SBA guidance and regulations previously provided that any borrower who applied for a PPP Loan before April 24, 2020 and repaid the loan in full by May 7, 2020 would be deemed by the SBA to have made the required certification in good faith.
The SBA has extended the repayment date for this safe harbor to May 14, 2020. Borrowers do not need to formally apply for the extension to take advantage of the new repayment date, which will be automatically implemented. The SBA has stated its intent to issue additional guidance on how it will review the certification prior to May 14, 2020.
As this extension and the SBA’s stated intent to issue additional guidance on the subject show, the issues concerning PPP Loan eligibility and forgiveness continue to evolve. If you have any questions regarding the PPP, PPP Loans, other issues related to the COVID-19 pandemic, or any other legal issue, please contact your FOS attorney.