September 19, 2020

Volume X, Number 263

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September 16, 2020

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Treasury Issues PPP Eligibility Guidance Related to Economic Need for Businesses Owned by Large Companies

The U.S. Department of Treasury issued a new version of its PPP FAQ this morning. Included was a new question related to the eligibility of businesses owned by “large companies with adequate sources of liquidity to support the business’s ongoing operations.” The FAQ highlighted that borrowers must not only review applicable affiliation rules to determine eligibility, but also assess their economic need for the PPP.

The FAQ clarifies that when borrowers make the certification related to needing the loan that they must make this certification in good faith, taking into account their current business activity and their ability to access other sources of liquidity sufficient to support their ongoing operations in a manner that is not significantly detrimental to the business. Additionally, the FAQ noted that a public company with a substantial market value and access to capital markets would be unlikely to make such a certification. 

Any borrowers that applied for a PPP loan prior to the issuance of this guidance (April 23) and repays the loan by May 7, 2020 will be deemed to have made the certification in good faith.

The full FAQ is available here

© Polsinelli PC, Polsinelli LLP in CaliforniaNational Law Review, Volume X, Number 114

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About this Author

Phil Feigen of the Polsinelli Law Firm Corporate Transaction Attorney, in Washington DC
Office Managing Partner

Phil Feigen brings a unique perspective to providing general corporate advice, as well as complex business counsel to clients in ever-changing regulatory environments.  For more than 20 years, Phil has been providing guidance with respect to Small Business Investment Companies and other Small Business Administrative regulations, federal and state banking laws and federal securities laws. 

Phil focuses on helping clients through the SBIC licensing process so that they may realize the benefits of the program and increase the amount of investment...

202-626-8330
Sara C. Ainsworth Securities & Corporate Finance Attorney Polsinelli Washington, D.C.
Associate

As an associate in the Securities & Corporate Finance practice, clients rely on Sara Ainsworth to work with Polsinelli’s team of attorneys to analyze each transaction matter to develop a strategic approach to representation based on the client’s immediate and long-term business and operational goals.

Working closely with seasoned Polsinelli attorneys in the Securities & Corporate Finance practice, Sara helps deliver a range of legal services during the life cycle of the client’s business—from selecting the appropriate choice of entity through to exit strategy.  Her practice focuses on:

  • Planning and executing capital-raising transactions
  • Drafting and negotiating key commercial agreements
  • Money service business and banking applications and registrations
  • Mergers and acquisitions and other strategic transactions
  • Fund formation, including regulated funds such as Small Business Investment Companies

Sara supports clients in a variety of industries, including the financial technology and mobility industries. Collaborating with attorneys from other related practices allows Sara and the entire attorney team to provide clients with comprehensive legal advice designed to minimize liability, maintain flexibility, and advance the client’s objectives.

202.772.8495