Paycheck Protection Program Update for 5/14/2020
The Small Business Administration finally offered clarification yesterday, May 13, which provided an important safe harbor for the necessity certification in regards to PPP loans.
They clarified that it will only be those PPP loans exceeding $2 Million that will need to have further due diligence to verify that the loan was "necessary" due to current economic uncertainty. For applicants whose PPP loan is under $2 Million (this threshold aggregated for affiliated entities) the SBA will treat this certification as having been made in good faith.
For those with loans over $2 Million it is recommended that you begin gathering documentation that can justify the "necessity" of the loan and help explain what issues caused the "economic uncertainty" that created the need for the loan.
For details you can refer to the SBA’s formal FAQ’s updates as of May 13th, specifically FAQ #46: https://www.sba.gov/sites/default/files/2020-05/Paycheck-Protection-Program-Frequently-Asked-Questions_05%2013%2020.pdf
We will continue to provide you with updates as information becomes available.