May 5, 2020

The U.S. Small Business Administration (SBA) has updated its Paycheck Protection Program (PPP) Frequently Asked Questions (FAQs) to extend the “safe harbor” deadline to avoid liability for the attestations in the PPP loan application from May 7 to May 14. As we’ve previously highlighted, this safe harbor is targeted at borrowers who received PPP loans “based on a misunderstanding or misapplication of the required certification standard” and are now required to repay misallocated loan funding. The relevant portion of the updated FAQs (question 43) is included below for your reference:

43. Question: FAQ #31 reminded borrowers to review carefully the required certification on the Borrower Application Form that “[c]urrent economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant.” SBA guidance and regulations provide that any borrower who applied for a PPP loan prior to April 24, 2020 and repays the loan in full by May 7, 2020 will be deemed by SBA to have made the required certification in good faith. Is it possible for a borrower to obtain an extension of the May 7, 2020 repayment date?

Answer: SBA is extending the repayment date for this safe harbor to May 14, 2020. Borrowers do not need to apply for this extension. This extension will be promptly implemented through a revision to the SBA’s interim final rule providing the safe harbor. SBA intends to provide additional guidance on how it will review the certification prior to May 14, 2020.

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