Apr 29 PPP Update: Treasury Secretary Says All PPP Loans Over $2M Will Have Full Review Prior to Loan Forgiveness
On April 23, 2020 the SBA issued an updated set of FAQs which included an update to the certification a borrower must make when applying for a PPP Loan. That specific FAQ (#31) is summarized below. Over the last few days, negative publicity regarding publicly traded companies, large chains, private equity groups and other large businesses receiving PPP loan proceeds has created a backlash against those companies and generated further scrutiny of the PPP loan program.
In an April 28, 2020 interview, Treasury Secretary Steven Mnuchin said, “for all PPP loans over $2 million, the Small Business Administration will be doing a full review of that loan before there is loan forgiveness.”
In an FAQ released last night, the SBA confirmed that businesses owned by private companies must consider the PPP loan certification stipulations detailed in FAQ #31 regarding adequate sources of liquidity to support the business’s ongoing operations.
We continue to encourage all businesses who have applied or plan to apply for the PPP loan to document their rationale as to why the loan is necessary to support ongoing operations.
As referenced above, FAQ #31 stipulated that a borrower must certify that “current economic conditions make necessary the loan request to support the ongoing operations” as part of the PPP Loan application. FAQ #31 further augmented this certification, indicating that new and existing borrowers must:
- “take current business activity into account” when determining if PPP funding is needed.
Furthermore, a borrower’s “ability to access other sources of liquidity sufficient to support ongoing operations in a manner that is not significantly detrimental to the business” must be analyzed. Borrowers have until May 7, 2020 to take these standards into account when confirming PPP eligibility. Borrowers may return the funds by this date to avoid certification issues.
Tune into our webinar on Thursday, April 30th at 10AM for additional information on this topic. View the invite and register here.
Sax will continue to update you as further details are made available. Reach out to your Sax advisor or email [email protected] with questions. For more and on-going information relative to your state and business, visit Sax’s COVID-19 Resource Center.