Paycheck Protection Program (PPP) Update
As of May 6, 2020, the Paycheck Protection Program has seen multiple updates and clarifications. This appears to be a response to large public companies and organizations receiving funds from the PPP while small businesses were denied funds. The Small Business Administration and Treasury Department have updated their Frequently Asked Questions regarding certification of funds needed.
Under the CARES Act a borrower was required to certify in good faith “current economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant.” In addition, Frequently Asked Question #31 goes on to say “Borrowers must make this certification in good faith, taking into account 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.”
Additionally, the FAQ’s point out that a borrower who applied for a PPP loan prior to the issuance of this guidance and repays the loan in full by May 7, 2020 will be deemed by SBA to have made the required certification in good faith. Further the SBA has extended the repayment date to May 14, 2020
The FAQ’s have also added Question #37 which refers back to Question #31 in regards to privately-owned businesses.
Based on the newly issued FAQ’s it is important to keep contemporaneous documentation not only on the way the funds are to be used but also how the business meets the good faith certifications in Question #31.
The SBA intends to provide additional guidance on how it will review the certification prior to May 14, 2020. Please see the below link which has all of the FAQ’s as it continues to be updated.
Please contact Detweiler, Hershey & Associates with any questions.Client News, Community, News