On Friday March 27, 2020, the President signed into law, the Coronavirus Aid, Relief, and Economic Security Act (H.R. 748) or “CARES Act,” providing for, among other things, the Paycheck Protection Program (“PPP”).
The U.S. Small Business Administration (“SBA”), in consultation with the U.S. Department of the Treasury, has issued additional responses to frequently asked questions by lenders and borrowers regarding the PPP (the “SBA PPP FAQs”).
On May 5, 2020, the SBA updated the SBA PPP FAQs to extend the safe harbor repayment date from May 7, 2020 to May 14, 2020 for PPP loans applied for prior to April 24, 2020. This was apparently done in order to allow the SBA more time to issue additional guidance on how it will review the required "necessity" certification.
Specifically, the new Q/A 43 provides:
Question: FAQ #31 (issued by the SBA April 23, 2020) 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.