In updates to its list of Frequently Asked Questions, the Small Business Administration said it will grant a seven-day extension to the safe harbor for firms that have access to other sources of capital to repay PPP loans.
Borrowers that applied for a PPP loan prior to April 24, 2020, and that repay the loan in full by May 14, 2020, will be deemed by SBA to have made the required certification of economic need in good faith.
“I’m not sure what this means, but I think it’s most likely a shot across the bow for PPP borrowers,” OBA President and CEO Roger Beverage said. “The original May 7 deadline was the first warning to borrowers who may not have met all of the CARES Act’s qualifications and who may have had access to other sources of capital. I think this is the second attempt to let borrowers know that they still have an ‘out’ if they may not have really needed the (PPP) funds, but perhaps viewed it as ‘free money,’ which of course it wasn’t.”
SBA noted the extension will be automatic and will be implemented through a revision to the interim final rule that provided the safe harbor. SBA also said that it expects to issue additional guidance on how it will review the borrower certification will be issued prior to May 14.
Visit the Treasury website at https://home.treasury.gov to view or download the SBA FAQ.