The Small Business Administration released updates to its frequently asked questions document about the Paycheck Protection Program late last week, providing additional clarification on its “economic necessity” certification. Over the weekend, the Wall Street Journal also reported that lawmakers and government officials are expected to make some additional revisions to the program, giving firms more time and flexibility to spend funds.
The SBA confirmed that for PPP borrowers with $2 million or less in loans, the certification of need will be presumed in good faith for the purpose of loan forgiveness. Specifically: “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.”
Previously, the government had announced that all loans greater than $2 million would be audited before borrowers received loan forgiveness.
The Treasury Department and SBA won’t be as easygoing on firms with loans exceeding $2 million, however. Those businesses and their loans are subject to further review. If the SBA deems that a firm lacks adequate basis for certifying that it needed the loan, then the agency will seek repayment of the loan balance and inform the lender that the business is ineligible for loan forgiveness, according to the update.
The SBA also extended the deadline to today, from Friday, for all PPP borrowers to return without penalty funds they received for which they are not eligible.