On May 13, 2020, the Small Business Administration (“SBA”) issued anxiously awaited guidance outlining the agency’s perspective on the good faith certifications made by Paycheck Protection Program (“PPP”) applicants. (See, PPP Frequently Asked Questions, #46).
PPP recipients of loans less than $2 million found relief in the SBA’s statement that it would deem those recipients to have made the certification in good faith.
For those with PPP loans at or above $2 million, the SBA will require the recipient to adequately support its certification. If the recipient fails to do so, the SBA indicated it will seek repayment of the loan in full, but the agency will not pursue administrative enforcement or refer the matter to other agencies.
While the SBA’s guidance provided some relief to the at or above $2 million class of recipients, the guidance leaves open the possibility that the SBA will require repayment of the loan before the standard two year maturity and doesn’t exclude other agencies, such as the Department of Justice, from pursuing a claim against the applicant for an arguably false certification.
The SBA has extended the certification safe harbor to May 18, 2020 to give borrowers time to process the additional guidance.