Atlanta, GA (404) 885-1400

Albany, GA (229) 431-3036 

Brunswick, GA (912) 280-9662

Happenings

  • Home
  • Blog
  • SBA and the Department of Treasury Issue New Guidance Regarding Eligibility for Loans...


workers\' compensation, workers compensation, workers comp, water loss claims, trucking litigation, tips, supreme court, sponsorships, spokeo inc, speaking events, slip and fall, seminar, scholarships, robins, retail, recognition, randy moody, quarterly property breakfast series, property claims, product hunt, prima, presentations, paul burke, partnerships, overtime hours, nccae insurance meeting, melody kiella, legal industry, legal, law firms in atlanta, law, kniffen, karen karabinos, juliana neelbauer, journal, john p reale, john feguson, jim anderson, jennifer parrott, jack reale, international association defense counsel, insurance, gold sponsor, georgia prima, georgia legal food frenzy, georgia law injuries, georgia insurance law, football, flsa, firm news, fair labor standard acts, events, estates attorney, estate planning, employment law, employee, elizabeth rose, dri, drew eckl farnham, diversity, def helps, daniel cheek, daniel c kniffen, dan kniffen, dan, cpcu, corporate attorney, corporate, community service, community, client alerts, charity, ce credit, breakfast, blog, best lawyers, awards, attorney speakers, atlanta\'s fastest growing law firms, atlanta business chronicle legal, atlanta business chronicle law firms, atlanta business chronicle, atlanta and tyrannosaurus tech, atlanta, arkansas, april, american bar association, Workers Compensation, Workers Comp, Welch, Volunteer, United Way Coastal of Georgia, US Department of Labor, Speaker, Rose bowl, Robert Welch, Robert L. Welch, Recognition, ROYAL CUP, OFFICE COFFEE, Merrill Lynch, Lisa N. Higgins, Legal Food Frenzy, Karen Karabinos, Juliana was sworn into the Forsyth County Supior Court by Honorable Chief Judge Jeffrey S. Bagley. Juliana is now barred in both Maryland and Georgia, Janeen Smith, Jack Reale, Iowa Hawkeyes, Georgia trusts and estates, Georgia Hispanic Chamber of Commerce, General Liability, GHCC, Firm News, Events, Eric Mull, Drew Eckl and Farnham Summer Associates, Drew Eckl and Farnham Corporate Law, Drew Eckl & Farnham Corporate, Diversity, DRI, DEF Interviews, DEF Achievements, Cyber coverage, Corporate Transaction, Corporate Law, Congratulations to Juliana Neelbauer for passing the Georgia bar! On Friday, Christina Jay, COVID-19, CHARITABLE CONTRIBUTIONS, Business Breakfast Series, Big changes to overtime, Awards, 2016 Summer Associates

SBA and the Department of Treasury Issue New Guidance Regarding Eligibility for Loans Under the Paycheck Protection Program

May 06, 2020 BY DEF Admin

notes.jpg

On April 29, 2020, the SBA and the Department of Treasury (DOT) published the additional guidance regarding the certification of “necessity” a company makes on its application for a loan under the Paycheck Protection Program (PPP) of the Cares Act.

On its application, borrowers must certify in good faith that: “Current economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant.”[1]

After Congress passed the Paycheck Protection Program and Health Care Enhancement Act, which, among other things, increased PPP funding by $310 billion, and following public backlash in response to certain public companies receiving large PPP loans, the SBA and the Department of Treasury (DOT) issued several updates to the PPP frequently asked questions page,[2] adding Questions/Answers 31, 37, and 39, as follows:

31. Question: Do businesses owned by large companies with adequate sources of liquidity to support the business’s ongoing operations qualify for a PPP loan?

Answer: In addition to reviewing applicable affiliation rules to determine eligibility, all borrowers must assess their economic need for a PPP loan under the standard established by the CARES Act and the PPP regulations at the time of the loan application. Although the CARES Act suspends the ordinary requirement that borrowers must be unable to obtain credit elsewhere (as defined in section 3(h) of the Small Business Act), borrowers still must certify in good faith that their PPP loan request is necessary. 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. (Emphasis added).

37. Question: Do businesses owned by private companies with adequate sources of liquidity to support the business’s ongoing operations qualify for a PPP loan?

Answer: See response to FAQ #31.”

39. Question: Will SBA review individual PPP loan files?

Answer: Yes. In FAQ #31, SBA reminded all borrowers of an important certification required to obtain a PPP loan. To further ensure PPP loans are limited to eligible borrowers in need, the SBA has decided, in consultation with the Department of the Treasury, that it will review 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.

On April 24, 2020, the SBA issued a Fourth Interim Final Rule, creating a limited “safe harbor” as to the certification of “economic need,” providing that any borrower that applied for a PPP loan prior to the date of the rule and repays the loan in full by May 7, 2020, will be deemed to have made the certification as to “economic need” in good faith.[3] On May 5, 2020, the SBA published FAQ 43 acknowledging the uncertainties of the “good faith certification” and extending the repayment date for the safe harbor to May 14, 2020. There is no need to apply for this extension. FAQ 43 also states that the SBA intends to provide additional guidance on how it will review the certification prior to May 14, 2020.

Given these developments, businesses who have or plan to apply for a PPP loan should reevaluate the certification of necessity made in the application to ensure the certification complies with the new guidance. Further, current and potential borrowers should remain up-to-date with respect to additional guidance that may be issued prior to May 14 and thereafter.

 
[1] The applicant also certifies that “All the information you provided in your application and in all supporting documents and forms is true and accurate. Knowingly making a false statement to get a loan under this program is punishable by law.”

rob-welch.jpg

Robert Welch

(404)-885-6405

[email protected]

Full Bio