Treasury Delays Safe Harbor Deadline for Returning Paycheck Protection Program (PPP) Loans
Patrick Neuman | 05.06.20
The U.S. Treasury Department released a new FAQ that addresses the PPP loan application certification that requires borrowers to certify that the current economic uncertainty makes the loan request necessary to support the borrower’s ongoing operations. Previously, the SBA’s guidance had provided that SBA would deem any borrower to have made the required certification in good faith if the borrower applied for a PPP loan prior to April 24, 2020 and repaid the loan in full by May 7, 2020 (the “safe harbor date”). In FAQ 43, SBA explained that it has now extended the safe harbor date for returning the loan to May 14, 2020. According to SBA, it intends to release additional guidance on how it will review the certification prior to May 14, 2020. Therefore, we suggest any business that is considering returning a PPP loan consider waiting until SBA issues the additional guidance.
FAQ 43 is provided below. The full U.S. Treasury FAQ can be accessed by clicking here. For more information or updates, please contact your Boardman Clark attorney or the authors.
43. Question: FAQ # 31 reminded borrowers to review carefully the required certification on the Borrower Application Form that “[c]urrent economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant.” SBA guidance and regulations provide that any borrower who applied for a PPP loan prior to April 24, 2020 and repays the loan in full by May 7, 2020 will be deemed by SBA to have made the required certification in good faith. Is it possible for a borrower to obtain an extension of the May 7, 2020 repayment date?
Answer: SBA is extending the repayment date for this safe harbor to May 14, 2020. 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. SBA intends to provide additional guidance on how it will review the certification prior to May 14, 2020.
DISCLAIMER: The information provided is for general informational purposes only. This post is not updated to account for changes in the law and should not be considered tax or legal advice. This article is not intended to create an attorney-client relationship. You should consult with legal and/or financial advisors for legal and tax advice tailored to your specific circumstances.