By Demetrius Robinson & Kevin O’Connor 

[5/13/2020 UPDATE: The SBA has issued new FAQ #47 extending the repayment date for the safe harbor to May 18, 2020]

The SBA, in consultation with the Treasury Department, has extended the safe harbor date – created to allow companies to return Paycheck Protection Program (PPP) funding with no penalty – from May 7, 2020 to May 14, 2020. (See FAQ #43). Companies that may not meet the updated guidance now have until May 14 to be in compliance with the safe harbor provision of having made a good faith certification of need in the original application.  

For background, on April 23, 2020, the Small Business Administration (SBA) issued updated guidance related to the necessary criteria for certifying that a company needed a PPP loan based upon “current economic uncertainty,” under the CARES Act. The updated guidance provided that companies had to conduct an additional analysis in order to determine whether they met the criteria for receipt of a PPP loan. The updated guidance specifically provided that companies would need to look at their “current business activity and ability to access other sources of liquidity sufficient to support ongoing operations in a manner that is not significantly detrimental to the business.” 

This change was in response to the growing alarm that certain public companies may have received PPP loans when they did not have a particular need for the funding, but it applies to all borrowers. 

SBA stated that regulations regarding the certification and its process for reviewing whether a PPP loan was needed will be issued prior to the May 14 deadline.

Here is the full FAQ #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.

See also FAQ #45 regarding the Employee Retention Credit:

Question: Is an employer that repays its PPP loan by the safe harbor deadline (May 14, 2020) eligible for the Employee Retention Credit?

Answer: Yes. An employer that applied for a PPP loan, received payment, and repays the loan by the safe harbor deadline (May 14, 2020) will be treated as though the employer had not received a covered loan under the PPP for purposes of the Employee Retention Credit. Therefore, the employer will be eligible for the credit if the employer is otherwise an eligible employer for purposes of the credit.

If you have any questions about the PPP loan program and what to consider when deciding to return a PPP loan, please contact Demetrius Robinson at or 614.497.5749 or Kevin O’Connor at or 216.310.4938.