Our prior announcement of May 6th provided information on additional guidance issued for the Paycheck Protection Program (PPP) regarding the repayment of funds received. Initially the guidance provided that recipients of PPP funds had until May 7th to carefully review the required certification on the Borrower Application Form that current economic uncertainty makes the loan request necessary to support the ongoing operations of the applicant. If you applied for a PPP loan prior to April 24, 2020 and repaid the loan in full by May 7, 2020, you will be deemed by the SBA to have made the required certification in good faith. The SBA extended the repayment date for this safe harbor to May 14, 2020.
Updated guidance in the PPP Q&A states “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.”
Additionally, borrowers with loans greater than $2 million that do not satisfy this safe harbor may still have an adequate basis for making the required good-faith certification, based on their individual circumstances in light of the language of the certification and SBA guidance. If SBA determines during its review that a borrower lacked an adequate basis for the required certification concerning the necessity of the loan request, the SBA will request repayment of the outstanding PPP loan balance and will inform the lender that the borrower is not eligible for loan forgiveness. If the borrower repays the loan after receiving notification from the SBA, the SBA will not pursue administrative enforcement.
See details in the updated PPP FAQs here.
Here at Frost, PLLC we are actively monitoring the situation and are available to help you navigate these turbulent times.
Please contact your Frost representative(s) with any questions.