Information for Paycheck Protection Program (PPP) Applicants & Borrowers

In an effort to ensure our clients have a complete understanding of the Small Business Administration’s (SBA) Paycheck Protection Program (PPP), we want to remind you that all borrowers must assess their economic need for a PPP loan. Specifically, all borrowers should review carefully the required PPP certification that "[c]urrent economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant." 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 ongoing operations in a manner that is not significantly detrimental to their business. According to current SBA guidance, "Any borrower that, together with its affiliates, received PPP loans with an original principal amount of less than $2 million will be deemed to have made the required certification concerning the necessity of the loan request in good faith."

The U.S. Treasury Department has stated that the SBA will audit every PPP loan of more than $2 million, and audits of those loans must be completed before PPP loans will be forgiven. If SBA determines in the course of its review that a borrower lacked an adequate basis for the required certification concerning the necessity of the loan request, SBA will seek repayment of the outstanding PPP loan balance and will inform the lender that the borrower is not eligible for loan forgiveness. If the borrower repays the loan after receiving notification from SBA, Treasury has stated that SBA will not pursue administrative enforcement or referrals to other agencies based on its determination with respect to the certification concerning necessity of the loan request.

Given that each applicant’s circumstances are unique, we are unable to advise individual clients about their business’ eligibility under the Coronavirus Aid, Relief, and Economic Security (CARES) Act and PPP regulations. If you have questions concerning your business’ eligibility to receive a PPP loan, we suggest you consult with your legal counsel.

For further information on Paycheck Protection Program loans, please visit the websites of the Department of the Treasury and the SBA.