On May 13, 2020, the SBA updated their Paycheck Protection Loan Program Frequently Asked Questions to include FAQ #46: How will the SBA review borrowers’ required good-faith certification concerning the necessity of their loan request?
Here are the highlights of what was posted by the SBA:
- Any borrower, who had a Paycheck Protection Program (PPP) loan 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 SBA implied but did not outright state that they will not be reviewing loans less than $2 million.
- Borrowers with loans greater than $2 million should still have an adequate basis for making the required good-faith certification based on individual circumstances given the language of the certification and SBA guidance. PPP loans over $2 million are subject to review by the SBA for compliance.
- If the SBA determines in its review that the borrower lacked the basis for the good-faith certification, the SBA will seek repayment of the outstanding loan balance and inform the lender of lack of eligibility for loan forgiveness. If the loan is repaid after notification, the SBA will not seek any other enforcement.
To read the SBA FAQs in full, you can find it here: Paycheck Protection Program Frequently Asked Questions
If you have questions, please contact a BSSF Advisor!