The Small Business Administration (“SBA”) issued further guidance on May 13, 2020 regarding how it will evaluate borrowers’ good-faith certification concerning the necessity of their loans through the Paycheck Protection Program (“PPP”).
In short, the SBA has stated that if the total amount of PPP loans received by a borrower and its affiliates is less than $2 million, the SBA will deem the borrower to have made the required certification in good faith. In effect, this guidance makes it extremely unlikely that the SBA will challenge the good faith certification of a borrower with a PPP loan under $2 million.
With respect to borrowers who exceed the $2 million threshold, the SBA has indicated that if, during the course of an audit it decides that the certification was inappropriate, the borrower will be allowed to return the funds to the SBA and the “SBA will not pursue administrative enforcement or referrals to other agencies based on its determination with respect to the certification.”
This new guidance appears to take penalties for fraud off the table, absent egregious circumstances.
If you have any questions regarding this new guidance or if there are any other issues with your PPP loan, please let one of our COVID-19 team members know at your earliest convenience:
As always, the attorneys at Webber & Thies are available to assist with issues you are currently facing due to the ongoing pandemic. Contact us to begin the conversation.
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Webber & Thies, P.C. is a full-service law firm based in Champaign-Urbana whose attorneys have been serving Central Illinois for more than 70 years.