The Small Business Administration is extending the “safe harbor” date for borrowers to return small business loans to May 14 (See FAQ Question 43).
Previous guidance reminded borrowers to review the required certification carefully on the Borrower Application Form that “[c]urrent economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant,” and set May 7 as the deadline to return borrowed funds without penalty.
AED has urged the administration and Congress to clarify and provide further guidance about the “good faith certification”, which has caused confusion and uncertainty for many PPP participants. The SBA and Treasury’s announcement that borrowers must consider their current business activity and “their ability to access other sources of liquidity sufficient to support their ongoing operations in a manner that is not significantly detrimental to the business” has perplexed small businesses across many industries.
According to the document, SBA “intends to provide additional guidance on how it will review the certification before May 14, 2020.” Be sure to track the latest news on AED’s Coronavirus Update Center.
AED recommends you confer with your attorney and/or CPA to help evaluate whether your company should consider returning your PPP loans and documentation to prove how the pandemic disrupted business operations and access to liquidity. After negative press surrounding large, publicly traded companies receiving loans, there will be significantly more scrutiny surrounding PPP applications from Congress and the administration, including the Department of Justice.
The updated guidance is available here: https://home.treasury.gov/system/files/136/Paycheck-Protection-Program-Frequently-Asked-Questions.pdf