Treasury Issues New Guidance on PP Certification Safe Harbor and Enforcement
The U.S. Department of Treasury issued a new Frequently Asked Question (“FAQ”) related to the good faith certification for the Paycheck Protection Program (“PPP”).
The FAQ states that “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 above carve-out for borrowers with less than $2 million in PPP loans is due to the fact that the SBA believes that such borrowers likely have not had access to adequate sources of liquidity.
For borrowers with more than $2 million in PPP, the FAQ states that they “may still have an adequate basis for making the required good-faith certification, based on their individual circumstances in light of the language of the certification and SBA guidance.”
Importantly, the SBA shed light on how it will review the certification. “If SBA determines in the course of its review that a borrower lacked an adequate basis for the required certification concerning the necessity of the loan request, SBA will seek repayment of the outstanding PPP loan balance and will inform the lender that the borrower is not eligible for loan forgiveness. If the borrower repays the loan after receiving notification from SBA, SBA will not pursue administrative enforcement or referrals to other agencies based on its determination with respect to the certification concerning necessity of the loan request.”
See the full guidance here.