In submitting an application for a Paycheck Protection Program (PPP) loan application, applicants make a certification that "[c]urrent economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant." On April 23, the Small Business Administration (SBA), in consultation with the Department of the Treasury, posted Frequently Asked Question #31 which clarified that borrowers must make this certification in good faith, taking into account their current business activity and their ability to access other sources of liquidity sufficient to support their ongoing operations in a manner that is not significantly detrimental to the business. Question #31 went on to clarify that it is unlikely that a public company with substantial market value and access to capital markets will be able to make the required certification in good faith, and such a company should be prepared to demonstrate to SBA, upon request, the basis for its certification. Finally, Question #31 provided that a borrower that applied for a PPP loan prior to the issuance of such guidance that repays its PPP loan in full by May 7, 2020 will be deemed by SBA to have made the required certification in good faith. On April 28, SBA posted frequently asked Question #37, which clarified that the analysis contained in Question #31 also applies to private companies with adequate sources of liquidity to support the business's ongoing operations.

On May 5, SBA posted Frequently Asked Question #43, which extended the deadline for repayment of PPP loans by one week from May 7, 2020 to May 14, 2020 to take advantage of the deemed good faith certification contained in Question #31. Question #43 also states that SBA intends to provide additional guidance on how it will review the certification made by borrowers prior to the May 14 deadline. While we continue to monitor SBA guidance and will post additional updates when available, organizations with questions on the required certification for PPP loans should reach out to their Pryor Cashman contact to discuss.

We also encourage you to review our COVID-19 Resource Library for additional guidance. 


Article originally published on 6 May 2020

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