By Robert T. Smith and Katherine C. Campbell
Late Tuesday, May 5, the SBA issued an update to its Frequently Asked Questions (see FAQ #43) to extend the safe harbor date for repayment of a PPP loan from May 7 to May 14. Any borrower that repays a PPP loan by this date will be deemed by SBA to have made the required certification regarding the necessity of the loan in good faith.
SBA indicates that it will issue a revised rule to implement this extension. In addition, the agency will provide additional guidance on “how it will review the certification” prior to May 14, 2020. FAQs #31 and #37 concerning whether a borrower has access to “other sources of liquidity” in considering the need for a PPP loan have created a significant amount of uncertainty for borrowers. We are hopeful that this guidance will include either a relaxation of this vague standard for private companies or an otherwise objective determination applicable to all borrowers.
Please contact one of the attorneys listed above if you have any questions regarding the Paycheck Protection Program.
Robert T. Smith heads the Finance and Commercial Transactions Practice Group. His diverse corporate practice focuses on representing companies and financial institutions in general business, transactional, securities and regulatory matters.
Katherine C. Campbell is an associate in the Litigation Practice Group at Friday, Eldredge & Clark. She serves as litigation counsel for individuals and businesses in complex business and commercial disputes.
Disclaimer: The information included here is provided for general informational purposes only and should not be a substitute for legal advice nor is it intended to be a substitute for legal counsel. For more information or if you have further questions, please contact one of our Attorneys.