New SBA Guidance Extends PPP Safe Harbor Deadline to May 18th May 15, 2020

ag smallNew SBA Guidance Extends PPP Safe Harbor Deadline to May 18th
By: Adam Glassman

In response to public scrutiny concerning Paycheck Protection Program (PPP) loans being disbursed to large companies like Shake Shack, the Small Business Administration (SBA) quickly produced Frequently Asked Question (FAQ) #31 to clarify the required necessity certification for PPP applicants.  The SBA stated in the recently issued FAQ #46 that 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.” To give borrowers the opportunity to review and consider the implications of FAQs #31 and #46, the deadline for ineligible borrowers to return PPP loan proceeds has been extended to May 18th. If loan proceeds are returned by the May 18th deadline, the SBA will not pursue penalties or refer the matter to other agencies.

Although FAQs #31 and #46 are specific to the required necessity certification, all PPP borrowers should carefully consider all the certifications contained in the PPP application. Keep in mind that a borrower who knowingly makes a false statement to obtain a loan may face imprisonment up to 30 years and/or a fine up to $1 million.  Given the possibility of steep penalties, if a borrower feels it received a PPP loan that it was not entitled to, for whatever reason, now is the time to act within the extended safe harbor deadline. If there is any doubt regarding one’s eligibility for an already disbursed PPP loan, do not hesitate to contact a trusted legal advisor at McCarthy Lebit that can inform you of all the SBA safe harbor guidelines.

Adam Glassman is an attorney at the Cleveland, OH-based law firm McCarthy, Lebit, Crystal & Liffman.

 

While we would be thrilled to work with all individuals, institutions and companies that read our advisories, we  want to clarify that these insights do not form a lawyer-client relationship and represent only general guidance without access or reference to all of the specific facts and circumstances.  If you do wish to engage McCarthy Lebit on a specific matter, please contact us by calling 216-696-1422 or by filling out an inquiry form located here.  If you are already a firm client, please contact the McCarthy Lebit attorney you work with to discuss these advisories and/or the nature of your concern.  In closing, please understand that the law, especially during this pandemic, is changing rapidly and we would recommend that you regularly contact your legal counsel to ensure that your actions are taken based on the most up-to-date versions of the laws.

 

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