On May 13, 2020, the SBA issued two new FAQs on extending the repayment date for the safe harbor and discussing how the SBA will review the required borrowers’ good-faith certification concerning the necessity of their PPP loan request. A copy of the new FAQs can be found here.
Extension of Safe Harbor Date
The SBA is extending the repayment date to May 18, 2020. Any borrower who applied for a PPP loan and repays the loan in full by May 18, 2020, will be deemed by the SBA to have made the required certification concerning the necessity of the loan request in good faith.
Safe Harbor for Loans Less than $2 million
According to the FAQs, the SBA has determined that the following safe harbor will apply to the SBA’s review of PPP loans: “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.”
Review of Loans Greater than $2 million
The SBA notes that borrowers with loans greater than $2 million may still have an adequate basis for making the required good-faith certification, based on their individual circumstances. All PPP loans in excess of $2 million will be subject to review by the SBA. If the 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, the SBA will seek repayment of the outstanding balance and the borrower will not be eligible for loan forgiveness. Importantly, “[i]f 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 the necessity of the loan request.”
If you have additional questions or want to discuss this guidance, please reach out to a member of our Corporate practice group for assistance.