May 14, 2020

The SBA updated its list of Frequently Asked Questions (FAQs) for the Paycheck Protection Program Loans to clarify the issue of certification in good faith. FAQ 46 states, “Any borrower that, together with its affiliates,20  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.” Although it is still good practice to document the necessity of PPP funds, there is now clarity that this particular documentation will not be subject to scrutiny by the SBA for loans under $2M.

The safe harbor provision was added after the SBA and Treasury determined that borrowers with loans below the $2 million threshold are less likely to have access to adequate sources of liquidity. Borrowers with loans greater than $2 million who therefore do not satisfy the safe harbor provision may still have an adequate basis for making the good-faith certification based on their individual circumstances. If the SBA determines during its review* that the borrower lacked an adequate basis for the required certification, the SBA will seek repayment of the loan balance and inform the lender that the borrower is not eligible for forgiveness. If the loan is repaid after notification from the SBA, the SBA will not take further action.

The most recent update also added FAQ 47 that extends the repayment date from May 14 to May 18. The SBA is providing borrowers an opportunity to consider FAQ 46 before deciding whether to repay the loan.

For more information about the PPP loan forgiveness, download the slides and recording from our May 12 webinar, Maximizing PPP Loan Forgiveness. For the latest news, information and resources related to the crisis bookmark our COVID-19 Response page.

For specific questions about PPP loan forgiveness, contact your CPA or send your question to questions@grfcpa.com.

* All PPP loans in excess of $2 million, and other PPP loans as appropriate, will be subject to review by SBA for compliance with program requirements set forth in the PPP Interim Final Rules and in the Borrower Application Form.