Small businesses that took out a PPP loan can breathe a small sigh of relief.


Image by Engin Akyurt from Pixabay

I didn’t say that its time to triple-fist fruity cocktails. But, then again, who am I to judge?

Forget the drinks for now and remember that feeling when your business got its Paycheck Protection Program loan. Pretty good, right? You felt like one of the lucky ones, with a new lifeline to cover some business expenses during really uncertain times.

Then reality sunk in. Or, more accurately, the Treasury.

All of a sudden, loan forgiveness required spending 75% of the PPP loan on payroll costs, and for borrowers to spend the forgivable amount over eight weeks. How’s that supposed to work when your non-essential business operates at far less than full employment capacity for the foreseeable future?

Plus, with the bad press surrounding some businesses that landed PPP loans, the Treasury announced that it would scrutinize other PPP loans too.

Yesterday, however, the Treasury dialed back the PPP audit. Check out No. 46 in the SBA Q&A:

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 concerning this issue: 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.

The logic here is that borrowers with loans below this threshold have less liquidity and need fewer impediments to rehire. In contrast, the SBA wants to focus its finite audit resources on larger loans.

Does that mean that borrowers of over $2 million are screwed? No, as long as they have “an adequate basis for making the required good-faith certification, based on their circumstances in light of the language of the certification and
SBA guidance.”

But, if you want to return the loan, you have a repayment extension from May 14 to May 18.

Unfortunately, however, many PPP issues remain unresolved:

  • When the heck will the Treasury release clearer forgiveness guidelines?
  • Will the Treasury or Congress relax the 75% rule?
  • And how about extending the eight-week time frame by several months?
  • Or, maybe, providing a longer term to repay the loan?

Stay tuned for that. In the meantime, time is running out to register for tomorrow’s live chat on Zoom at Noon EDT. Jeff Nowak and I will explore how ‘Classic’ FMLA will impact workplaces as non-essential businesses re-open.

We’ll focus on:

  • FMLA overlap with FFCRA and PPP
  • ADA/FMLA interplay
  • Mental health issues
  • Ways to stop FMLA fraud and abuse
  • Q&A (click here to ask your question beforehand)

If you’d like to join us on Friday, May 15, 2020, at Noon EDT, space is now limited.

So, get right and click here to register.

Or get left.

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