(Updated May 14, 2020) On May 13, 2020, the Treasury Department updated its Frequently Asked Question list to provide guidance regarding the much talked about “good-faith certification” that each borrower must make on its Paycheck Protection Program (PPP) application. Specifically, in order to obtain PPP funds, the borrower must certify that “Current economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant. “ From Day 1, experts, borrowers, and even the Treasury Department have been unsure about how to apply that certification in practice.
Given the uncertainty, via FAQ #46, the Treasury Department provided a “safe harbor” for borrowers who received less than $2M in PPP funds: “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.” This is obviously great news for thousands of borrowers who had, and justifiably so, anxiety regarding whether or not their business could make the good faith certification.
This “safe harbor” is only for borrowers receiving less than $2M in funding. In addition, those borrowers who did receive greater than $2M in PPP funds are reminded that if they feel they cannot make the good faith certification, they have until Monday, May 18, 2020 to return all PPP funds with no questions asked.
FLB’s attorneys have extensive experience in all matters relating to PPP and the CARES Act. We can provide guidance to businesses and business owners faced with these issues brought about by the COVID-19 pandemic, including loan forgiveness. Please contact us using the form below, or give us a call at 610-797-9000. We wish you well during these extraordinary times.