The Small Business Administration (SBA), in consultation with the Department of the Treasury, has once again extended the PPP safe harbor repayment date. The SBA updated its Paycheck Protection Program Frequently Asked Questions (FAQs) by adding FAQ #47, which states that borrowers who repay their loans in full by Monday, May 18, 2020 will be protected by its recent safe harbor rule. The safe harbor date was previously today, May 14, 2020.
Yesterday, the SBA also added FAQ #46 to address how it intends to review a borrower's good-faith certification that their loan was necessary. The FAQ stated that a borrower that received a PPP loan of less than $2 million will be deemed to have made the required certification concerning the necessity of the loan request in good faith.
The SBA also amended the potential consequences for borrowers with loans greater than $2 million if it determines that the borrower did not have an adequate basis for the good-faith certification. Whereas its previous guidance threatened civil and criminal penalties, the SBA now states that it will seek repayment of the loan. If the loan is repaid, the SBA will not pursue administrative enforcement or referrals to other agencies.
You can read our summary of FAQ #46 here or the full text of the SBA's guidance here.
We expect additional guidance to be issued by the SBA and/or the Treasury in the coming days. We are actively monitoring the situation and will keep you appraised of any developments. If you have any questions about these or any other matters in the meantime, please contact your Kreischer Miller relationship professional or any member of our team. We also continue to update our COVID-19 Resource Center, which you can access here.
Information contained in this alert should not be construed as the rendering of specific accounting, tax, or other advice. Material may become outdated and anyone using this should research and update to ensure accuracy. In no event will the publisher be liable for any damages, direct, indirect, or consequential, claimed to result from use of the material contained in this alert. Readers are encouraged to consult with their advisors before making any decisions.