SBA promises more guidance on ‘uncertainty’ certification, extends deadline to repay PPP funds
06 May 2020
The SBA announced Tuesday that PPP borrowers will have an additional week to decide whether to send back their loan. Before this new May 14 deadline, the SBA will release additional guidance on how the SBA will critique a borrower’s “uncertainty” certification.
As of Monday, 117,834 PPP loans have been issued to Ohio borrowers. As a condition to receiving a PPP loan, a borrower was required to certify that “current economic uncertainty makes [the] loan request necessary to support the ongoing operations of the Applicant.”
After the first tranche of PPP funds was quickly depleted, media reports exposed publicly traded companies (who conceivably could access funds on the market) that received PPP loans, while main-street businesses were left out. Some private companies who received PPP loans also received scrutiny, such as the Los Angeles Lakers.
On April 28, the SBA created a mini uproar by applying guidance to privately held companies that was originally directed at public companies, concerning the “uncertainty” certification:
Borrowers must make this certification in good faith, taking into account their current business activity and their ability to access other sources of liquidity sufficient to support their ongoing operations in a manner that is not significantly detrimental to the business.
Previously, the SBA said it would waive any penalties if PPP loans were repaid by May 7. That date is extended to May 14.
With the extension of the May 7 deadline, and the promise that more guidance is coming, it is wise to wait before making a decision to refund the PPP money, unless it is determined to be clearly false.
Conscientious business owners are desperate for some bright-line tests, so they know what their obligations are. I am actively advising clients on this critical decision. Contact me at email@example.com.Tags: Business Law, Capital and Finance