JSI recently held a webinar providing an overview of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), which included information on the Paycheck Protection Program (PPP). As a follow up to our webinar, we want to alert you to an updated Frequently Asked Questions (FAQ) that provides additional information about the PPP released by the Small Business Administration (SBA). We also want to make you aware that one of the updates to the FAQ, Question 31, provides new information regarding one of the certifications applicants must make “in good faith.”
In Question 31, the FAQ asks whether large companies with adequate sources of liquidity can qualify for a PPP loan. In response, the SBA reiterates that all borrowers should “carefully review” the certification which states that “[c]urrent economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant.” The SBA then states that in making this certification, borrowers should take 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.” This response concludes by stating that a borrower who now believes that they no longer can make that certification and “repays the loan in full by May 7, 2020 will be deemed by SBA to have made the required certification in good faith.”
In addition to this “clarification,” U.S. Treasury Secretary Steven Mnuchin and SBA’s Administrator Jovita Carranza released a joint statement announcing that the SBA will “review all [PPP] loans in excess of $2 million, in addition to other [PPP] loans as appropriate, following the lender’s submission of the borrower’s loan forgiveness application.”
If your company has questions regarding how Question 31 of the FAQ applies to your company, we encourage you to seek guidance from your legal counsel. If you have more general questions about the PPP or CARES Act, please contact John Kuykendall at 301-459-7590 or Douglas Meredith at 801-910-6288.