SBA Extends PPP Repayment Date for Safe Harbor to May 14, 2020

Businesses now have one extra week to conduct their risk/reward analyses to decide whether to return their PPP loans. In prior guidance (Treasury FAQ 31 and 37), the SBA reminded borrowers that they  “should review carefully the required certification that “{c}urrent economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant.”” Treasury further advised that “any borrower that applied for a PPP loan prior to the issuance of the guidance and repays the loan in full by May 7, 2020 will be deemed by the SBA to have made the required certification in good faith.”  This guidance has confused and frightened many borrowers particularly in light of the additional guidance in FAQ 39 warning of automatic SBA audits in connection with forgiveness applications from borrowers who received more than $2 million in PPP funds as well as other loans as determined by SBA. Yesterday, in FAQ 43, SBA extended the repayment deadline to May 14, 2020 and also stated that it intends to issue additional guidance prior to the extended deadline on how it will review the good faith certification.

Stay tuned for additional client alerts addressing additional guidance provide by SBA and Treasury on these issues.