The safe harbor deadline for businesses to repay their Paycheck Protection Program (“PPP”) loan amount in full and maintain a certification of good faith has been extended to May 14, 2020. Borrowers do not need to apply for this extension.
As previously indicated, all loan applicants must certify that a PPP loan is necessary to support ongoing operations due to current economic uncertainty. In a previous FAQ released by the Small Business Administration (“SBA”) and Treasury Department and discussed in our blog post New Considerations for Small Business PPP Borrowers, all borrowers were reminded of these certification requirements and encouraged to examine the necessity of their loan and ability to access other sources of liquidity to support ongoing operations.
Safe harbor repayment was provided as a recourse-free way for businesses to return loan funds if it was later determined they did not in fact meet the certification requirements.
Originally, FAQ 31 advised that “[a]ny borrower that applied for a PPP loan prior to the issuance of this guidance and repays the loan in full by May 7, 2020, will be deemed by SBA to have made the required certification in good faith.” Borrowers now have until May 14, 2020, to do so.
The new FAQ also shares that additional guidance on how the SBA will review the necessity certification is forthcoming and will be released prior to May 14, 2020.