Paycheck Protection Program: Safe Harbor for Good-Faith Certification
Small businesses that receive Paycheck Protection Program (PPP) loans of less than $2 million are considered to meet the required good-faith certification. According to newly released a FAQ from the SBA and Treasury, “any borrower that, together 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 concerning the necessity of the loan request in good faith.”
The SBA considers small businesses that receive the PPP loans under $2 million are less likely to have access to sufficient sources of liquidity so the safe harbor is appropriate as well as it provides economic certainty for the businesses.
Small businesses that receive PPP loans over $2 million would be reviewed by the SBA to make sure the self-certification for the loans was appropriate. If the SBA concludes the business lacked an acceptable basis for the required certification for the PPP loan, the business will be required to repay the outstanding PPP loan balance and the lender will be informed that the borrower is not eligible for loan forgiveness. The SBA will not pursue administrative enforcement or referrals to other agencies if the business repays the loan.
Read the complete PPP FAQs here.
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