By Ashley Brand, Tax Manager
The SBA recently updated their FAQs and issued another interim final rule which provides additional guidance on the certification of need “safe harbor” and makes available additional loans for certain partnerships and seasonal employers.
Safe Harbor for the Certification of Need
Under FAQ 47, borrowers that received a PPP (Paycheck Protection Program) loan and later determined they cannot, in good faith, certify their need for the loan, originally had until May 7th to repay the funds. This date was later moved to May 14th, and now has been moved to May 18th.
Under FAQ 46, borrowers, together with affiliates, that took PPP loans that total to less than $2mm, are deemed to automatically satisfy the “good faith” requirement.
The SBA previously stated that they will review all loans in excess of $2mm. In an offer of clarity to those that are uncertain that they can certify their need for the loan, if the SBA determines during its review that the borrower lacked adequate basis for their previous certification, and if the borrower then repays their loan, the SBA will not pursue administrative enforcement or referrals to other agencies based on its determination.
The SBA’s FAQs can be found here:
Additional Loans for Partnerships and Seasonal Employers
SBA guidance regarding partner compensation from the partnership and seasonal employer payroll computations was issued after many borrowers had already applied for their loan. Understanding that many of these borrowers could have taken a higher loan if they had the guidance, that was later made available, the SBA is allowing borrowers in this circumstance, to apply for additional funds.
The most recent interim rule can be found here:
SBAs Interim Final Rule – Safe Harbor