On May 13, the SBA released new guidance regarding the required good faith certification of need by PPP loan applicants, providing safe harbor to all recipients of less than $2 million in loan proceeds.  This guidance also speaks to ramifications for borrowers with loans of more than $2 million that are determined to have lacked an adequate basis for their certification.

Highlights from PPP Loan FAQs 46-47 include:

• Borrowers with PPP loans under $2 million will be deemed to have made the need certification in good faith;
• If a borrower’s loan is over $2 million and the SBA concludes no requisite need existed, ramifications will be limited to denial of forgiveness and repayment of the loan at the 1% interest rate if repaid upon notification of the SBA’s determination; and
• The SBA extended the repayment date for this safe harbor to May 18, 2020 to give PPP borrowers an opportunity to consider FAQ 46.

Read more about PPP Loan FAQs here.

DISCLAIMER: This advisory resource is for general information purposes only. It does not constitute business or tax advice, and may not be used and relied upon as a substitute for business or tax advice regarding a specific issue or problem. Advice should be obtained from a qualified accountant, tax practitioner or attorney licensed to practice in the jurisdiction where that advice is sought.