Today, the SBA provided a safe harbor when it announced that it will deem any borrower to have made a good-faith certification of economic necessity on the borrower’s application for a Paycheck Protection Program (PPP) loan if the borrower received less than $2 million in PPP funds.

The SBA previously announced its intention to review PPP loans in excess of $2 million dollars. According to its latest guidance, if the SBA determines that a borrower who received more than $2 million of PPP funds lacked an adequate basis for its certification of necessity, the SBA will seek repayment of the loan and will not allow loan forgiveness. However, it did provide a safe harbor from other consequences for these borrowers when it stated that if the borrower repays its PPP loan after receiving notification from the SBA, the SBA will not pursue further action against the borrower.


The SBA caused significant consternation among PPP borrowers when it issued its FAQ #31 on April 23. That guidance raised the question of whether the SBA would challenge borrowers’ certifications on their PPP applications that “current economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant.” FAQ #31 caused a large number of borrowers to reconsider their PPP applications, and many borrowers decided to return their PPP loans.

The SBA’s guidance today (FAQ #46) brings much-needed clarity regarding the borrower’s certification of necessity. Borrowers who received loans less than $2 million may now be confident that the terms of their PPP loans will remain as they expected. Likewise, FAQ #46 allows borrowers that received more than $2 million to wait for the SBA’s review rather than preemptively repaying their PPP loans.

The SBA has not yet released substantial guidance on PPP loan forgiveness. Hantzmon Wiebel will continue to monitor PPP developments and publish additional comments. If you have any questions, or if we can help in any way, please don’t hesitate to contact us.

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