BusinessMotivation

Positive News For PPP Forgiveness

By May 13, 2020 No Comments

Big News came today. On the eve of the Safe Harbor deadline, a positive piece of clarity has emerged for our local business partners regarding the Paycheck Protection Program forgiveness FAQs from the US Treasury.

 “…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…”

 

We encourage you to read the Q&A addition on page 16, question #46 and determine what this means for your business and employees. If you’ve been concerned that you may not have adequate sources of liquidity needed to charter the unknown months ahead without PPP, we encourage you to read the new guidance to determine if this qualifies to aid your company.

We know it will still be a long path to forgiveness by collecting the necessary paper trail and accurate calculations of payroll expenses. These will be imperative in the weeks to come.

As your bank and lending partner, the SBA requires we submit validation of your circumstances and that all funds provided were properly used and necessary due to current economic uncertainty. We can direct you to the right resources and information as you document circumstance and pay your people.

The last weeks have seemed more heavy than hopeful, so today’s news from the US Treasury is a positive sign we are moving in the right direction towards a clearer path to reclaiming our strong central Ohio economy.

For this, we are thankful. It’s time we gain more good news.

As of Monday, we have assisted more than 720 central Ohio small businesses for a collective $58 million in PPP funding, allowing more than 7,450 employees to receive paychecks through the 8 weeks of stimulus support through the CARES Act.

If you have not begun documentation on your current and future forecast effects Covid-19 has played on your business and employees, start today. We put together suggestions to consider and answer that assist with validity of your need for PPP.

For your convenience, we’ve posted FAQ #46 below in it’s entirety, but encourage you to read all FAQs available.

Let’s see what #47+ brings. Clarity, we hope.

Until then, here’s to a safe, healthy reopening of our communities.

 

As of May 13, 2020

46. Question: How will SBA review borrowers’ required good-faith certification concerning the necessity of their loan request?

Answer: When submitting a PPP application, all borrowers must certify in good faith that “[c]urrent economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant.” SBA, in consultation with the Department of the Treasury, has determined that the following safe harbor will apply to SBA’s review of PPP loans with respect to this issue: Any borrower that, together with its affiliates,20 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.

SBA has determined that this safe harbor is appropriate because borrowers with loans below this threshold are generally less likely to have had access to adequate sources of liquidity in the current economic environment than borrowers that obtained larger loans. This safe harbor will also promote economic certainty as PPP borrowers with more limited resources endeavor to retain and rehire employees. In addition, given the large volume of PPP loans, this approach will enable SBA to conserve its finite audit resources and focus its reviews on larger loans, where the compliance effort may yield higher returns.

Importantly, borrowers with loans greater than $2 million that do not satisfy this safe harbor 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. SBA has previously stated that all PPP loans in excess of $2 million, and other PPP loans as appropriate, will be subject to review by SBA for compliance with program requirements set forth in the PPP Interim Final Rules and in the Borrower Application Form. 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. SBA’s determination concerning the certification regarding the necessity of the loan request will not affect SBA’s loan guarantee.21

20 For purposes of this safe harbor, a borrower must include its affiliates to the extent required under the interim final rule on affiliates, 85 FR 20817 (April 15, 2020).
21 Question 46 published May 13, 2020.