Less than two weeks ago, in response to news of large, publicly-traded, corporations receiving Paycheck Protection program (PPP) Loans, the Small Business Administration (SBA) announced that it would review all loans in excess of $2 million, and would perform targeted reviews of loans under that threshold. In addition, the SBA raised significant concern among all PPP recipients that borrowers needed to assess the circumstances around the certification of economic need and promptly return funds by May 7 if it was determined that a borrower did not meet this in good faith. The SBA subsequently extended the safe harbor date to May 14 and indicated it would provide additional guidance for how a borrower could determine that the need certification was met.

Today, the SBA released the aforementioned guidance regarding the needs certification stating that any borrower, together with its affiliates, that received a PPP loan with an original principal amount under $2 million will be deemed to have made the economic needs certification in good faith.

Furthermore, if the SBA subsequently determines that the economic needs certification was not met it will only seek repayment of the PPP loan and deny forgiveness. Borrowers who repay their loans after receiving such a notification from the SBA will not be subject to administrative enforcement or referrals to other agencies.

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The information provided in this communication is of a general nature and should not be considered professional advice. You should not act upon the information provided without obtaining specific professional advice. The information above is subject to change as a result of rapidly evolving legislative developments and government guidance.