On April 24, 2020, the SBA gave an option to borrowers who applied for a Payroll Protection Program (“PPP”) loan on or before April 23, 2020 – but who were now questioning whether they could make a good faith certification that they needed the loan to support ongoing operations – to return the loan proceeds by May 7, 2020. A PPP loan borrower who repaid the loan in full by May 7, 2020, would be automatically deemed by the SBA to have made the required good faith certifications regarding their need for the PPP loan.
On May 5, 2020, the SBA extended this safe harbor deadline to return PPP loans from May 7, 2020 to May 14, 2020, and also stated that it would issue additional guidance on how to assess need for certification purposes. On May 13, 2020, as LCW previously reported, the SBA provided this guidance by adding question 46 to its FAQ document.
Later on May 13, 2020, the SBA added question 47 to this same FAQ document, further extending the deadline for borrowers to return the PPP loan proceeds from May 14, 2020 to May 18, 2020. The response to question 47 reads as follows:
SBA is extending the repayment date for this safe harbor to May 18, 2020, to give borrowers an opportunity to review and consider FAQ #46. Borrowers do not need to apply for this extension. This extension will be promptly implemented through a revision to the SBA’s interim final rule providing the safe harbor.
While it was expected that today would be the deadline for borrowers to return the PPP loan funds if they determined they could not make the required good faith certification, borrowers now have until May 18, 2020 to make this decision. Employers should consider the information provided in FAQ question 46, discussed here, and are encouraged to consult with their lenders, auditors, and other appropriate advisors for guidance on how this information impacts their individual situations.