SBA Extends Safe Harbor to Return PPP Loans to May 18, 2020

SBA Extends Safe Harbor to Return PPP Loans to May 18, 2020

Additional Guidance on Loans under $2 million, More Flexibility on Loan Amounts

May 14, 2020


The Small Business Administration (SBA) issued new FAQ 47 on the Paycheck Protection Program (PPP) that extends the safe harbor deadline to return PPP loans from May 14 to May 18, 2020, presumably to allow borrowers time to consider the implications of just-released SBA guidance.

This extension follows a new SBA safe harbor announced yesterday in SBA FAQ 46 that explained that, for PPP loans (including those made to affiliates) totaling less than $2 million, the SBA will not review the borrower’s certification for good faith, but will instead deem the certification to have been made in good faith. Thus, the SBA will not look at whether these borrowers had the need for or access to other sources of liquidity when they certified that “[c]urrent economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant.”


However, for borrowers with PPP loans totaling more than $2 million, FAQ 46 explained that the SBA will continue to apply its guidance in FAQs 31 and 37 and that it will review the borrower’s access to other sources of liquidity. If the SBA determines that the certification was improperly made, it will demand repayment. FAQ 46 states that if the loan proceeds are then repaid, the SBA will not pursue enforcement or referrals to other agencies based on the certification.

The SBA also issued Interim Final Rule on Loan Increases (IFR 10) late yesterday. It permits more flexibility for the loan amount in certain circumstances, provided that the lender has not already filed its SBA Form 1502 for the PPP loan. Generally, IFR 10 provides that if a partnership received a PPP loan that did not include any compensation for its partners, the loan amount can be increased to include partner compensation, if Form 1502 has not already been filed. It also provides additional relief for seasonal employers.

Additional resources are available on our Coronavirus Response Resources web page and updates are in our online newsletter IAA Today. In addition, the IAA Exchange is available for members to discuss questions with each other.

For more information on the SBA PPP loan program, see the SBA website here.

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TAGS: Coronavirus, COVID-19, PPP, Small Business Administration

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