PPP Loan Forgiveness Guidance Released
Posted on May 15, 2020
By Scott Zickefoose, CPA, CM&AA, Transaction Advisory and Tax Senior Manager
New Paycheck Protection Program (PPP) Loan Forgiveness Guidance Released to Provide Clarification to Borrowers
On May 13, 2020, the Small Business Administration (SBA) and U.S. Treasury released additional FAQ and Interim Final Rule guidance to assist borrowers as they navigate the Paycheck Protection Program (PPP). The changes set forth additional considerations regarding the “economic uncertainty” language, set forth safe harbors and provide opportunities for some to secure additional PPP funding.
“SBA and U.S. Treasury Release Additional Paycheck Protection Program Guidance for Borrowers” Excerpt:
New information regarding certification of economic uncertainty and the need for the PPP loan
- Treasury initially released FAQ 31 which caused significant confusion among borrowers, indicating borrowers need to reevaluate their initial economic need certification in light of the few details contained within the FAQ (Refer to Keiter’s update on FAQ 31). If borrowers felt they were unable to make the requisite certification, Treasury provided a safeharbor deadline of May 14, 2020, to return the funds without penalty or recourse. One day prior to the May 14, 2020, deadline, Treasury released FAQ 46 which provides the following additional information for borrowers evaluating their ability to certify that “current economic uncertainty” of the COVID-19 pandemic makes such a loan for their business “necessary to support their ongoing operations”.
New information contained in FAQ 46
If the borrower, along with its affiliates, has an original PPP principal borrowing of less than $2 million, the borrower will be deemed to have made the required certification in good faith. This guidance effectively gives a safe-harbor to the smaller borrowers and does not require them to defend their initial certification if ever audited by the Small Business Administration. It is important to note that this safe harbor provision is specific to the certification of economic uncertainty. Borrowers must still certify the accuracy of all other certification made during the borrowing process.
We know things are hectic but remember to lean on your advisors (counsel, accountant) for insights they have, as many of these decisions in normal times are made infrequently.
We are here to answer your questions and assist in any way we can. We will be providing additional insights and updates as we move through this period of uncertainty.
Scott Zickefoose
Email: szickefoose@keitercpa.com
Phone: 804.273-6253
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