PPP Loan Borrowers Given Additional Time To Decide If They Want To Return Their Loan

Borrowers now have until May 14th to return their PPP loans. The SBA has provided additional guidance to lenders and borrowers regarding the good faith certification requirements of the loan. This new information has led many borrowers to question whether they should accept the loan or return it. The SBA has indicated that it intends to provide further guidance on how it will review borrower certification sometime prior to the new safe harbor deadline, giving borrowers additional time and hopefully enough information to make a final determination.

Relevant SBA guidance is as follows: 

SBA FAQ #31 (published April 23, 2020), reminded borrowers to review carefully the required certification on the Borrower Application Form that “[c]urrent economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant.” It further added “Borrowers must make this certification in good faith, taking into account their current business activity and their ability to access other sources of liquidity sufficient to support their ongoing operations in a manner that is not significantly detrimental to their business.”

SBA FAQ #39 (published April 29, 2020), answers the question of whether the SBA will review individual PPP loan files. It reads “To further ensure PPP loans are limited to eligible borrowers in need, the SBA has decided, in consultation with the Department of the Treasury, that it will review all loans in excess of $2 million, in addition to other loans as appropriate, following the lender’s submission of the borrower’s loan forgiveness application. Additional guidance implementing this procedure will be forthcoming.”


A PDF of the Paycheck Protection Program Loan FAQs can be downloaded from the SBA website: https://www.sba.gov/document/support–faq-lenders-borrowers