Treasury Department Issues Safe Harbor for Certain PPP Loans

In a recent post, we highlighted the Frequently Asked Questions issued by the U.S. Treasury Department regarding the highly popular Paycheck Protection Program (“PPP”) loans established by the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act.  In a recent update to the FAQs, Treasury addressed how the Small Business Administration (“SBA”) will review borrowers’ required good-faith certification concerning the necessity of their PPP loan request.  As you may recall, when applying for a PPP loan, a prospective borrower had to certify in good faith that “current economic uncertainty makes this loan request necessary to support [the prospective borrower’s] ongoing operations.”  This topic has been of particular interest to employers, as Treasury and the SBA previously announced that businesses with adequate access to liquidity may not qualify for a PPP loan.

In the FAQs, Treasury provided a safe harbor for certain loans when it stated that: “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.”  Although this pronouncement is good news for certain PPP loan recipients, it is not necessarily doom and gloom for those that borrowed more than $2 million.  So long as these recipients have “an adequate basis for making the good-faith certification, based on their circumstances in light of the language of the certification and SBA guidance,” they need not worry.

For questions about PPP loans or any other labor and employment law issue, please do not hesitate to contact the attorneys at Hoffman & Hlavac.  To stay on top of the labor and employment developments that affect your workplace, please subscribe to our blog and follow us on social media.