Update on Paycheck Protection Program
Friday, May 1, 2020
Posted by: Jo Formal
Following the recent criticism and subsequent returns of amounts received under the Small Business Administration (SBA) Paycheck Protection Program (PPP), the SBA in consultation with the Department of Treasury has issued additional guidance via the Frequently Asked Questions (FAQs) for the Paycheck Protection Program Loans on April 29, 2020. Specifically, SBA guidance in FAQ #31 addresses qualification of “large companies with adequate sources of liquidity to support the business’s ongoing operations” including the following response:
“Specifically, before submitting a PPP application, all borrowers should review carefully the required certification that “[c]urrent economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant.” Borrowers must make this certification in good faith, taking into account their current business activity and their ability to access other sources of liquidity sufficient to support their ongoing operations in a manner that is not significantly detrimental to the business. For example, it is unlikely that a public company with substantial market value and access to capital markets will be able to make the required certification in good faith, and such a company should be prepared to demonstrate to SBA, upon request, the basis for its certification.”
As noted further in FAQ #39 “Will SBA review individual PPP loan files?”, the following was noted:
“Yes. In FAQ #31, SBA reminded all borrowers of an important certification required to obtain a PPP loan. To further PPP loans are limited to eligible borrowers in need, the SBA has decided, in consultation with the Department of the Treasury, that it willreview all loans in excess of $2 million, in addition to other loans as appropriate, following the lender’s submission of the borrower’s loan forgiveness application. Additional guidance implementing this procedure will be forthcoming.”
The full additional guidance for Frequently Asked Questions (FAQs) for the Paycheck Protection Program Loans can be found at: https://home.treasury.gov/system/files/136/Paycheck-Protection-Program-Frequently-Asked-Questions.pdf.
Kevin E. Pahud, CPA
Partner || BKD, LLP
This information is being provided based on the best information we have as of April 29, 2020. If you have questions or we can be of assistance in this regard, please contact your BKD advisor.