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SBA announces economic uncertainty safe harbor for loans under $2 million

May 13, 2020

Over the last several days, there has been a lot of discussion on how businesses that received Paycheck Protection Program (PPP) loans could verify that, due to economic uncertainty, they needed the funds to support their ongoing operations.

The concern started on April 23rd when the Treasury published FAQ #31. This FAQ, in part, says:

“Specifically, before submitting a PPP application, all borrowers should review carefully the required certification that ‘[c]urrent economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant.’ Borrowers must make this certification in good faith, taking into account their current business activity and their ability to access other sources of liquidity sufficient to support their ongoing operations in a manner that is not significantly detrimental to the business.”

Borrowers were given until May 7th to pay back the loans so that, upon doing so, they would be deemed to have made the required economic uncertainty certification in good faith. This May 7th deadline was then moved to May 14th.

Today, May 13th, the Treasury released FAQ #46, which provides that any borrower where they, together with any affiliates, received PPP loans of less than $2 million are deemed to have met the economic uncertainty test.  

This is only a safe harbor for meeting the economic uncertainty certification. Borrowers still must track expenses during the covered period and apply for loan forgiveness with their lender. 

For borrowers and affiliates with total loans of $2 million or more, the Treasury restated its intent to review all these loans. The FAQ says that based on individual circumstances, it may still have an adequate basis for making the required good-faith certification.

If in the course of the review, the SBA determines the borrower lacked an adequate basis for the required certification regarding economic uncertainty, the SBA will deny any forgiveness request and seek repayment of the outstanding loan balance. If the borrower repays the loan amount after receiving notification from the SBA, the SBA will not pursue administrative enforcement or referrals to other agencies based on its determination with respect to the certification concerning the necessity of the loan request.


Gregory G. Butler, CPA
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