UPDATE AS OF MAY 14, 2020: The SBA has extended the date for the safe harbor period to return PPP funds to May 18, 2020. Please view this Client Alert for the most current information.
Borrowers now have until May 14, 2020 to decide whether to return Paycheck Protection Program (PPP) funds within a safe harbor period provided by the U.S. Small Business Administration (SBA). The SBA released FAQ 43 on May 5th, just two days prior to the initial May 7th deadline, stating that the safe harbor period would be automatically extended for all borrowers to May 14th. SBA also noted that it intends to provide additional guidance on how it will review the certification prior to May 14th. The text of the new FAQ is provided here:
“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.”
For additional information on the certification requirements and safe harbor period, please review our May 1st Client Alert. In that alert we provided a list of factors to consider when determining whether the certification was made in good faith and suggested that borrowers should keep detailed records to support the loan request.
We will continue to monitor the ever-changing regulations and guidance on the PPP and provide updates as warranted. If you have specific questions about your situation, please do not hesitate to reach out to your Womble Bond Dickinson contact or to one of us.