On May 13, 2020, the Small Business Administration (“SBA”) released two FAQs, numbers 46 and 47, regarding two safe harbors from an SBA inquiry into a borrower’s statutorily required certification of economic necessity for a loan under the Paycheck Protection Program (“PPP”). FAQ 46 states that the SBA will deem any borrower that, together with its affiliates, received PPP loans with an original principal amount of less than $2 million to have made the required certification in good faith. FAQ 47 relates to an existing safe harbor for PPP loans repaid by a specific date; the FAQ extends the deadline from May 14, 2020, to Monday, May 18, 2020. Accompanying the FAQs was an interim final rule that memorialized an earlier FAQ (number 43) that had set the repayment deadline of May 14.
The net effect of the FAQs is that a borrower that, with its affiliates, has PPP loans of more than $2 million must decide whether to repay the loan by May 18, or to undergo SBA’s review of the good-faith basis for the certification of economic necessity when the borrower’s loan forgiveness application is filed. The SBA has outlined the nature of its review in only general terms. Borrowers with PPP loans of $2 million or less are generally safe from such a review.