Late Wednesday, May 13, 2020, the Treasury Department issued new SBA guidance in the form of FAQ #47, extending the safe harbor date to May 18, 2020. The deadline for the safe harbor, which was created to allow companies to return Paycheck Protection Program (PPP) funding with no penalty, was originally May 7, 2020 but was previously extended to May 14, 2020. (See FAQ #43).
The new FAQ comes on the heels of FAQ 46, which was released earlier that same day, and included a bright line test that every borrower that took a loan in an amount of less than $2 million will be deemed to have made the certification in good faith. It also provides that borrowers with loans in excess of $2 million will be given the chance by the SBA to repay the loans outside of the safe harbor deadline and avoid the penalties associated with the lack of a good faith certification.
Here is the full FAQ #47:
Question: An SBA interim final rule posted on May 8, 2020 provided that any borrower who applied for a PPP loan and repays the loan in full by May 14, 2020 will be deemed by SBA to have made the required certification concerning the necessity of the loan request in good faith. Is it possible for a borrower to obtain an extension of the May 14, 2020 repayment date?
Answer: Yes, SBA is extending the repayment date for this safe harbor to May 18, 2020, to give borrowers an opportunity to review and consider FAQ #46. 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.
If you have any questions or would like to discuss further, please contact Justine Lara Konicki at jlk@kjk.com or 216.736.7211.