New Guidance from SBA Addresses Borrowers’ Good Faith Certification
On May 13, 2020, the Small Business Administration (SBA) released an update to its frequently asked questions that addresses borrowers’ required good-faith certification in regard to the necessity of their Paycheck Protection Program (PPP) loan request.
Generally speaking, any borrower that, along 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 regarding the necessity of the loan request in good faith. For purposes of this safe harbor, and under the Interim Final Rules on affiliates previously issued on April 15, 2020, a borrower must include its affiliates to the extent required.
Additionally, all PPP loans in excess of $2 million will be subject to review by the SBA for compliance with program requirements set forth in the PPP Interim Final Rules and the Borrower Application Form. If, in the course of its review, the SBA determines that a borrower lacked an adequate basis for the required certification concerning the necessity of the loan request, the SBA will seek repayment of the outstanding PPP loan balance. It will also inform the lender that the borrower is not eligible for loan forgiveness.
Do you have questions about SBA guidance on borrowers’ good faith certification, or other tax matters? Please contact our team at (334) 472-9490 or via email at [email protected].