The Treasury Department and Small Business Administration (SBA) announced the government will extend the safe harbor repayment date from May 7 to May 14. The guidance is meant for businesses that applied for a loan under the Paycheck Protection Program (PPP), which they may not be eligible to receive.
The emergency relief funds in the PPP were earmarked for small businesses with fewer than 500 employees dealing with economic uncertainty related to the COVID-19 crisis. However, government records show that public companies have received more than 300 loans worth more than $1 billion. The SBA has indicated it will review all PPP loans over $2 million when employers present their forgiveness calculations next year.
Employers who apply for PPP loans must certify in good faith that they meet the required level of â€œeconomic need,â€ which takes into account their current business activity and ability to access other sources of capital. Publicly traded companies, businesses with large valuation, and those owned by large companies with adequate sources of liquidity do not meet this standard, according to previous SBA guidance. Some companies in this position, including Shake Shack Inc., the Los Angeles Lakers, and others mentioned in the national news have indicated they will be repaying their PPP loans.
REDW can help review the terms of your PPP loan certification to ensure you have accurately and carefully documented the financial impact of the coronavirus pandemic on your business. Documentation supporting the need for your PPP loan should include detailed summaries and projections to form a comprehensive picture of anticipated business operations. Please contact Principals James Ortiz or Christina Roderick if you would like to revisit your loan assumptions.
The full PPP FAQs guidance, including questions #31 and #43, is available on the SBA website.
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