The Treasury has released more guidance on the Paycheck Protection Program (PPP) certification requirement. The PPP application requires borrowers to certify in good faith that “current economic uncertainty makes this loan request necessary to support the ongoing operations of the applicant.”
Today’s guidance clarifies that any borrower (and its affiliates) who receives a PPP loan of less than $2 million total in principal will be deemed to have made the certification in good faith.
This determination was based on the assumption that most borrowers below this threshold are less likely to have access to adequate sources of liquidity in the current economic environment.
Borrowers with PPP loans greater than $2 million are still subject to an audit and should evaluate and document their ability to satisfy the good faith certification requirement. Borrowers who return the loan funds by May 18, 2020 will be deemed to have made the certification.
The Treasury’s guidance also addresses the course of action that will be taken if a borrower does not return the loan funds by May 18 but lacks adequate basis for the certification. The SBA will seek repayment of the loan balance and inform the lender that the borrower is ineligible for loan forgiveness.
If the borrower repays the loan after receiving this notification, the SBA will not pursue administrative enforcement or referrals to other agencies.