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New SBA Guidance on Good Faith Certifications for PPP Loans

On May 13th the Small Business Administration (SBA) released FAQ #46 related to the “good faith certification” requirements for Payroll Protection Program (PPP) loans.  You can read the FAQs on the Treasure website, but here is a brief summary of the most recent notice.

For PPP Loans Under $2 Million

FAQ #46 states “Any 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.”

It goes on to state that the “SBA has determined that this safe harbor is appropriate because borrowers with loans below this threshold are generally less likely to have had access to adequate sources of liquidity in the current economic environment than borrowers that obtained larger loans. This safe harbor will also promote economic certainty as PPP borrowers with more limited resources endeavor to retain and rehire employees. In addition, given the large volume of PPP loans, this approach will enable SBA to conserve its finite audit resources and focus its reviews on larger loans, where the compliance effort may yield higher returns.”

This demonstrates the SBA’s goal of aligning with Congress’s intent to provide the PPP funds to small businesses in need.

For PPP Loans Over $2 Million

FAQ #46 states “borrowers with loans greater than $2 million that do not satisfy this safe harbor may still have an adequate basis for making the required good-faith certification, based on their individual circumstances in light of the language of the certification and SBA guidance. SBA has previously stated that 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. 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.”

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Additional COVID-19 Small Business Resources

As new information is released we will continue to update you on the changes and continue to provide you insight and planning opportunities that benefit both you personally and your business. For more information and other helpful resources check out the COVID-19 Resources for Small Business.