SBA Extends Safe Harbor Deadline One Week, to May 14, 2020
To obtain a loan under the Paycheck Protection Program (“Program”) applicants are required to certify that “current economic uncertainty makes this loan necessary to support [its] on-going operations…”
In late April, the SBA issued clarification regarding this certification. As discussed previously SBA counseled that “borrowers must certify in good faith that the PPP loan is necessary” and in so certifying “take into account their current business activity and their ability to access other sources of liquidity sufficient to support their ongoing operations in a manner that is not significantly detrimental to the business.” The SBA further stated that applicants who do not meet this standard are encouraged to withdraw their applications, and if they do so, they will be deemed to have made the certification in good faith. This safe harbor has been incorporated into regulation.
Originally, the SBA established a date of May 7 for borrowers to repay their loans without suffering adverse consequences. On May 5, SBA extended the safe harbor date to May 14. Borrowers have one more week to decide whether to repay loans that they have received. Similarly, applicants who filed a loan application before the SBA clarified the certification, but who have not yet received their loan, have an additional week to decide whether to withdraw their applications.
Saul Ewing Arnstein & Lehr attorneys are experienced in helping companies determine whether they can make good faith certifications. If you have questions regarding an issue raised in this alert, please contact the author or the attorney at the Firm with whom you are regularly in contact.