Loan Forgiveness and the PPP

As a business owner, the landscape surrounding the Paycheck Protection Program (PPP) is constantly shifting.

During the last month, the U.S. Treasury and the Small Business Association (SBA) requested that any company receiving funds under the PPP review the certification that “current economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant.”

Borrowers who are unsure that their business meets that criteria are able to return funds if they believe the certification was not made “in good faith.”

The deadline to return funds was just extended again this week to May 18, 2020.

Questions and Uncertainty with PPP

Many business owners and lenders have been leaning heavily on FAQs published by the SBA to explain how the entities would review the good faith certification.

Question 46 was recently added, and the answer states, “Any borrower that, together with its affiliates, 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.”

Having more details surrounding the good faith certification should be helpful for those borrowers receiving funds of less than $2 million.

For those who took loans over $2 million, the Departments of Treasury states that those companies “may still have adequate basis for making the required good-faith certification.”

For next steps, the SBA will review these applications to determine if they believe the good faith certification was met.

When it’s determined that the loan is not eligible for loan forgiveness, the lender will be informed. If the borrower pays back the loan, the “SBA will not pursue administrative enforcement or referrals to other agencies.” Lenders will be happy to note that the determination “will not affect SBA’s loan guarantee.”

Many taking PPP loans have been worried about the uncertainty around the eligibility, distribution and the safe harbor timeframe.

With this new guidance, small businesses and lenders should start to breathe a little bit easier.


For any questions about the PPP and your eligibility, fill out our form below, and the experts from Morgan & Associates will contact you right away.