SBA Clarifies Safe Harbor Repayment Criteria before May 14 Deadline

  |   May 13, 2020

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The Small Business Administration (SBA) issued its final guidance today on the Paycheck Protection Program (PPP) regarding the safe harbor repayment date of May 14 – the last day employers can return PPP funds if they were not legally entitled to apply for the loans. Given the large volume of PPP loans, the guidance shields smaller borrowers and saves the enforcement power of the SBA to review the applications of larger borrowers.

The latest guidelines confirm that any employer who received a loan worth $2 million or less is safe from SBA scrutiny as to whether their certification meets the “good faith” PPP standard that “current economic uncertainty makes this loan request necessary.” The government has decided that these borrowers have used the program appropriately and that eliminating the threat of related audit and penalties will ensure borrowers use money as intended – to pay salaries and urgent expenses, and save jobs.

Employers receiving PPP loans of more than $2 million will be subject to a higher level of scrutiny. Earlier guidance from the SBA indicated that the agency would examine all loans in this category when employers present their loan forgiveness calculations next year. If a borrower’s certification lacks an adequate basis for the loan request, the SBA will seek repayment of the outstanding PPP loan balance and inform the lender that the borrower is not eligible for loan forgiveness. If that is the case, the SBA will not pursue administrative enforcement, as long as the PPP loan is repaid.

Read the full text of the guidance here, under question #46. Please contact Principals James Ortiz or Christina Roderick to discuss any concerns you may have regarding your PPP loan, forgiveness calculations, and other PPP issues.


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