(TAX UPDATE) NEW GUIDANCE: PPP Good-Faith Certifications
In the last couple of weeks, the Treasury and SBA have been requesting that companies receiving loans under the Paycheck Protection Program (PPP) review their certification that "current economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant." Attention was drawn swiftly to several public companies who were noted for receiving funds under the program (many of whom have since repaid the loan proceeds).
In light of the heightened news and publicity, the Treasury and SBA provided a "safe harbor" to borrowers giving them until May 14, 2020, to return funds, if they believed - after the SBA released FAQ 31 - that the request did not rise to the level of "necessary" under the new guidance and the certification was not made "in good faith." Both civil and criminal penalties were also put forward.
THE GOOD NEWS: Earlier today, the SBA and Treasury updated their FAQs and with question 46 stated that "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."
We now have certainty and comfort for borrowers receiving less than $2 million in loan proceeds. You can find the full FAQs on the US Department of the Treasury's website by clicking here.