April 24, 2020

The U.S. Small Business Administration has issued a new interim final rule on the Paycheck Protection Program (PPP) that clarifies the loan eligibility of various types of entities ranging from legal gaming establishments to public hospitals to private equity firms and hedge funds. This interim guidance also formally inserts into the PPP program guidance a new safe harbor already issued in sub-regulatory FAQs for PPP applicants. This safe harbor targets PPP applicants who may not have fully considered the attestations for participation in the program, which were clarified yesterday in new FAQs that we already notified you about. The safe harbor in the interim rule provides:

Consistent with section 1102 of the CARES Act, the Borrower Application Form requires PPP applicants to certify that “[c]urrent economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant.” Any borrower that applied for a PPP loan prior to the issuance of this regulation and repays the loan in full by May 7, 2020 will be deemed by SBA to have made the required certification in good faith. The Administrator, in consultation with the Secretary, determined that this safe harbor is necessary and appropriate to ensure that borrowers promptly repay PPP loan funds that the borrower obtained based on a misunderstanding or misapplication of the required certification standard.

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