New guidance from the U.S. Small Business Administration (SBA) and Department of the Treasury puts Paycheck Protection Program (PPP) borrowers and potential borrowers on notice that they should be able to prove in “good faith” that “[c]urrent economic uncertainty makes this loan request necessary to support [their] ongoing operations” to be eligible for the loan. The guidance specifically uses the example that it would be “unlikely that a public company with substantial market value and access to capital markets will be able to make the required certification in good faith, and such a company should be prepared to demonstrate [emphasis added] to SBA, upon request, the basis for its certification.” This appears to be a warning to PPP borrowers of the possibility of federal audits and investigations to come. The guidance goes on to state that any “borrower that applied for a PPP loan prior to the issuance of this guidance and repays the loan in full by May 7, 2020 will be deemed by SBA to have made the required certification in good faith.” For more information, see question #31 of the guidance found here.
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