Safe Harbor For Borrowers Of PPP Loans With An Original Loan Amount Of Less Than $2 Million - May 13, 2020
Today, the SBA provided further guidance concerning the good faith certification requirements of the PPP loan. Specifically, it added FAQ #46 which provides the following safe harbor:
Any borrower that, together with its affiliates,1 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.
In FAQ #46 the SBA reiterated that all PPP loans in excess of $2 million, and other loans as appropriate, will be subject to review and provided the following with regard to administrative actions that will be taken if a borrower fails to meet the certification of necessity requirement:
If 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]
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[1] For purposes of this safe harbor, a borrower must include its affiliates to the extent required under the interim final rule on affiliates, 85FR 20817 (April 15, 2020).
Any borrower that, together with its affiliates,1 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.
In FAQ #46 the SBA reiterated that all PPP loans in excess of $2 million, and other loans as appropriate, will be subject to review and provided the following with regard to administrative actions that will be taken if a borrower fails to meet the certification of necessity requirement:
If 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]
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[1] For purposes of this safe harbor, a borrower must include its affiliates to the extent required under the interim final rule on affiliates, 85FR 20817 (April 15, 2020).