On the eve of its May 14 deadline for borrowers to return their PPP funds, if they discovered that they might not have made the uncertainty certification1 in accordance with the SBA’s expanded concept of what the borrower had certified, the SBA extended its “amnesty” for repayment to May 18 via FAQ #47. Many borrowers have considered returning their PPP funds for reasons we have previously explained. Of course, SBA’s May 13 FAQ #46 provided significant comfort regarding the certification. Extending the deadline from May 14 to May 18 provides an extra few days for PPP borrowers to consider their options.
Here is the exact language of FAQ #47:
Question: An SBA interim final rule posted on May 8, 2020, provided that any borrower who applied for a PPP loan and repays the loan in full by May 14, 2020, will be deemed by SBA to have made the required certification concerning the necessity of the loan request in good faith. Is it possible for a borrower to obtain an extension of the May 14, 2020, repayment date?
Answer: Yes, SBA is extending the repayment date for this safe harbor to May 18, 2020, to give borrowers an opportunity to review and consider FAQ #46. 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.
As discussed in this article, FAQ #46 provides significant relief with respect to the uncertainty certification:
- A safe harbor for PPP loans under $2 million and an ability to repay the PPP loan.
- A policy pursuant to which a borrower with a PPP loan of $2 million or more can repay the loan after a demand by the SBA (which presumably would come after a fact-based analysis of the borrower’s uncertainty certification), with no additional penalty or enforcement action taken by the SBA.
While we would have preferred the SBA to have released FAQ #47 at the same time it issued FAQ 46, the extension is good news for businesses and their advisors.
1 The “uncertainty certification” is that “current economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant.” Applicants must make this certification in good faith.