The SBA Paycheck Protection Program
The SBA has provided recently updated guidance with respect to its Paycheck Protection Program (“PPP”).
SBA Review of Individual PPP Loan Files
As of its guidance published on May 13, 2020, the SBA has clarified that it will be reviewing all loans in excess of $2 million, in addition to other loans as appropriate, following the lender’s submission of the borrower’s loan forgiveness application. (See Question 39 of the SBA’s PPP FAQs (link provided below)).
Effect of Employee Layoffs on PPP Loan Forgiveness Amount
As of May 13, 2020, the SBA has stated that laid-off employees whom the borrower offered to rehire for the same salary/wages and same number of hours will not reduce a borrower’s PPP loan forgiveness amount. The SBA plans to issue a final interim rule providing that for this exception to apply, the borrower must have made a good faith, written offer of rehire, and the employee’s rejection of that offer must be documented by the borrower. (See Question 40 of the SBA’s PPP FAQs).
Safe Harbor for Certain Borrower Good-Faith Certifications
Under SBA rules for the PPP, at the time of application, all borrowers must certify in good faith that “current economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant.” The SBA guidance as of May 13, 2020 provides a safe harbor for the SBA’s review of the borrower good-faith certification for any borrower that, together with its affiliates, received PPP loans with an original principal amount of less than $2 million. Such borrowers “will be deemed to have made the required certification concerning the necessity of the loan request in good faith.” (See Question 46 of the SBA’s PPP FAQs).
Please continue to check back for updates of our COVID-19 resources, as we anticipate that the SBA and the U.S. Department of the Treasury will provide additional guidance regarding loan forgiveness and other matters regarding the PPP. You can visit the Treasury website here and the most recently issued SBA PPP FAQ’s here.