On April 30, 2020, the Treasury issued a new Interim Final Rule as well as new FAQs in connection with the Paycheck Protection Program (“PPP”), providing clarification on the prospective borrower audits and maximum loan amounts available to company groups. Below is a summary of the new guidance.
- Borrower Audits: Pursuant to the new FAQs, the SBA has decided 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. This guidance was provided in direct relation to the recent FAQ regarding borrower certifications concerning the need for the loan, which is covered in more detail here. Additional guidance implementing the audit procedure will be forthcoming from the SBA.
- Maximum Loan Amount for Corporate Groups: The Treasury’s new Interim Final Rule clarifies that businesses that are part of a single corporate group shall not receive more than $20 million in PPP loans in the aggregate. The limitation is immediately effective with respect to any loan that has not yet been fully disbursed as of April 30, 2020. Failure by the applicant to notify the lender of an excess loan amount will result in an unauthorized use of the PPP loan and will not be eligible for forgiveness.
If you have additional questions or want to discuss this new guidance, please reach out to a member of our Corporate practice group for assistance.
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