On May 13th, the Small Business Administration issued guidance extending a safe harbor to borrowers receiving PPP loans with an original principal amount of less than $2 million. This news comes a relief to small businesses, “who will be deemed to have made the required certification concerning the necessity of the loan request in good faith,” SBA said in updates to its PPP FAQ (https://home.treasury.gov/system/files/136/Paycheck-Protection-Program-Frequently-Asked-Questions.pdf).
According to the SBA, the safe harbor will promote economic certainty for PPP borrowers as they work to retain and rehire employees. The $2 million threshold also will help the SBA conserve its resources and focus its reviews on larger loans.
The SBA does recognize, however, that some small businesses will need to borrow more than $2 million, stating that, “Importantly, borrowers with loans greater than $2 million that do not satisfy this safe harbor may still have an adequate basis for making the required good-faith certification, based on their individual circumstances in light of the language of the certification and SBA guidance.”
Check back with us for more updates, and give us a call to see how these new guidelines might affect you or your small business.