The U.S. Treasury first released a series of FAQs with regard to the Paycheck Protection Program (“PPP”) on April 3, 2020. The list of FAQs continues to grow (almost daily) as new issues are identified. The latest update was issued on May 13, 2020. Many new questions are answered along with some updates, modifications, and new interpretations of the PPP including the certifications required to remain eligible to receive a PPP loan. The manner and ability by which a business can demonstrate its need for relief under the PPP has been of particular interest and concern for many weeks. Yesterday, in FAQ 46, a line was drawn providing safe harbor for all borrowers receiving less than $2 million who are now deemed to have made their certification of need in good faith. Those who received more than $2 million must still make an adequate showing of need. If the lending institution and/or Small Business Administration (“SBA”) determines that a borrower did not possess a legitimate need for the PPP loan, i.e., had adequate alternative forms of funding or liquidity, the borrower will be required to repay the loan and will not be eligible for its forgiveness option. According to FAQ 47, if the borrower returns the loan proceeds by May 18, 2020, the SBA will not pursue administrative enforcement actions.
If you have applied for funding under the PPP or are considering doing so, please be sure to read the FAQs as well as the other guidance provided by the original Interim Final Rule issued April 3, 2020, the updated Interim Final Rule – Promissory Notes, Authorizations, Affiliation, and Eligibility issued on April 24, 2020, and the newest Interim Final Rule — Nondiscrimination and Additional Eligibility Criteria issued on May 8, 2020.
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Updated May 15, 2020.
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