Spilman Thomas & Battle, PLLC
May 14, 2020 - Charleston, West Virginia
COVID-19 Update: New Critical Guidance on PPP Loan Forgiveness
by F. B. Webster Day
| On May 13, 2020, the Small Business Administration ("SBA") issued FAQ # 46 dealing with its plan to review certain PPP loans (in response to COVID-19) to determine if the “necessity” certification was made in good faith by the borrower at the time of application. The good news for small borrowers is that the SBA announced a new safe harbor for them: Any borrower that, with its affiliates, received PPP loans with an original principal amount of less than $2 million will be deemed to have made in good faith the certification about the necessity of the loan request. The FAQ affirms that borrowers of over $2 million may still meet the good faith test based on their individual circumstances “in light of the language of the certification and SBA guidance.” Such borrowers who elect not to take advantage of the safe harbor announced on April 23 (FAQ # 31) by paying back their loans by May 14, 2020, may take comfort from that statement. Also of help to them (and their lenders) is SBA’s explanation of the implications of an adverse determination on the certification question. The FAQ states if SBA determines a borrower lacked an adequate basis for making the certification about the necessity of the loan request:
FAQ # 39, issued April 29, states that additional guidance on how SBA will implement reviewing “all loans in excess of $2 million” will be forthcoming. FAQ # 46 does not address the review process. If you have any questions, please contact our COVID-19 Task Force. |
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