Paycheck Protection Program Loan Certification

The Small Business Administration (SBA), in consultation with the Department of the Treasury, in its update FAQs, has determined that the following safe harbor will apply to SBA’s review of Paycheck Protection Program (PPP) loans with respect to any borrower that, together with its affiliates, received PPP loans with an original principal amount of less than $2 million.  These borrowers will be deemed to have made the required certification concerning the necessity of the loan.

The SBA has determined that this safe harbor is appropriate because borrowers with loans below this threshold are generally less likely to have had access to adequate sources of liquidity in the current economic environment than borrowers that obtained larger loans.

Importantly, 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.  The SBA goes on to state, that the SBA will review these applications to determine if they believe the good faith certification was met. In the case that they determine the loan is not eligible for loan forgiveness, they will inform the lender. If the borrower pays back the loan the “SBA will not pursue administrative enforcement or referrals to other agencies”. Additionally, for the lenders the determination “will not affect SBA’s loan guarantee.”

For questions regarding the paycheck protection program and you, feel free to contact us.

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