Have You Heard That The SBA Has Provided a Safe Harbor for PPP Loans That Were Under $2 Million?
Calling all business owners! If you have received Paycheck Protection Program or PPP funds less than $2 million, this is the blog for you. Our CPA firm in Mid-MO wants to do our best to keep you as updated as possible on information that pertains to you that the Treasury announces. As you know by now, things are changing constantly throughout this COVID-19 pandemic and our Central MO CPA firm is here to help you stay on top of that information. Keep reading this week's blog to learn more about how the SBA is now providing a safe harbor for PPP loans under $2 million.
What does this mean for you?
This information is HUGE for many of the clients we've had the pleasure of working with because many businesses have taken out PPP loans under $2 million. Now, the SBA will be providing a safe harbor to businesses that fit this description. The reason they are choosing to provide a safe harbor to those who borrow under $2 million is basically, they realize that businesses like this, typically wouldn't have had access to adequate sources of liquidity to get them through this season of their business. Doing this will allow the SBA to focus its' energy on reviewing the larger loans.
We here at Wilson Toellner CPA understand that this is a lot of information to take in at once. If you have any questions about any of this, please do not hesitate to give us a call. We would be happy to help you navigate through any of this information. We can be reached at any one of the phone numbers listed below.
The Treasury recently released the following information in a sequence of frequently asked questions:
46. Question: How will SBA review borrowers’ required good-faith certification concerning
the necessity of their loan request?
Answer: When submitting a PPP application, all borrowers must certify in good faith
that “[c]urrent economic uncertainty makes this loan request necessary to support the
ongoing operations of the Applicant.” SBA, in consultation with the Department of the
Treasury, has determined that the following safe harbor will apply to SBA’s review of
PPP loans with respect to this issue: Any borrower that, together with its affiliates,20
received PPP loans with an original principal amount of less than $2 million will be
deemed to have made the required certification concerning the necessity of the loan
request in good faith.
SBA has determined that this safe harbor is appropriate because borrowers with loans
below this threshold are generally less likely to have had access to adequate sources of
liquidity in the current economic environment than borrowers that obtained larger
loans. This safe harbor will also promote economic certainty as PPP borrowers with
more limited resources endeavor to retain and rehire employees. In addition, given the
large volume of PPP loans, this approach will enable SBA to conserve its finite audit
resources and focus its reviews on larger loans, where the compliance effort may yield
higher returns.
Importantly, borrowers with loans greater than $2 million that do not satisfy this safe
harbor may still have an adequate basis for making the required good-faith certification,
based on their individual circumstances in light of the language of the certification and
SBA guidance. SBA has previously stated that all PPP loans in excess of $2 million, and
other PPP loans as appropriate, will be subject to review by SBA for compliance with
program requirements set forth in the PPP Interim Final Rules and in the Borrower
Application Form. If SBA determines in the course of its review that a borrower lacked
an adequate basis for the required certification concerning the necessity of the loan
request, SBA will seek repayment of the outstanding PPP loan balance and will inform
the lender that the borrower is not eligible for loan forgiveness. If the borrower repays
the loan after receiving notification from SBA, SBA will not pursue administrative
enforcement or referrals to other agencies based on its determination with respect to the
certification concerning necessity of the loan request. SBA’s determination concerning
the certification regarding the necessity of the loan request will not affect SBA’s loan
guarantee.
What does this mean for you?
This information is HUGE for many of the clients we've had the pleasure of working with because many businesses have taken out PPP loans under $2 million. Now, the SBA will be providing a safe harbor to businesses that fit this description. The reason they are choosing to provide a safe harbor to those who borrow under $2 million is basically, they realize that businesses like this, typically wouldn't have had access to adequate sources of liquidity to get them through this season of their business. Doing this will allow the SBA to focus its' energy on reviewing the larger loans.
Have Questions?
We here at Wilson Toellner CPA understand that this is a lot of information to take in at once. If you have any questions about any of this, please do not hesitate to give us a call. We would be happy to help you navigate through any of this information. We can be reached at any one of the phone numbers listed below.
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