PPP Loan Certification & Forgiveness Update

May 13, 2020Business, Covid-19

Certification Guidance for Borrowers

This morning, Treasury issued additional guidance related to the certification for the need of Paycheck Protection Program (PPP) Loan funds.

In prior guidance, Treasury had indicated that the borrower’s certification: “current economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant” would be considered in light of the borrower’s overall liquidity and ability to obtain funds outside of the PPP Loan in a manner that would not be significantly detrimental to the business.

This additional consideration of liquidity and the ability to obtain other funds caused concern for many borrowers.

Today’s guidance provides a safe harbor for those with loans of less than $2 million, as follows:

“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.” (Treasury FAQ #46).

PPP Loan Forgiveness

We are still awaiting guidance from Treasury and SBA related to loan forgiveness calculations. Specifically, no additional guidance has been released relating to expenses paid and incurred in the loan period.

(“FORGIVENESS.—An eligible recipient shall be eligible for forgiveness of indebtedness on a covered loan in an amount equal to the sum of the following costs incurred and payments made during the covered period”.)

We recognize the frustration this has caused and will send an update as soon as guidance is released.

Questions Regarding Loan Certification?

Contact Smith Schafer for further discussion and guidance.

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