There is welcome news this week for nonprofits concerned about their eligibility to qualify for loan/grants under the Paycheck Protection Program (PPP). Due to the lack of clear guidance, many have been questioning whether their participation was appropriate and if funds should be returned before a critical May 14 grace period.
The SBA, in consultation with the Treasury Department, has just released a new FAQ #46 that appears to address some of these concerns by creating a safe harbor for organizations receiving PPP funds under $2 million: “Any borrower that, together with its affiliates, received PPP loans with an original principal amount of less than $2 million will be deemed to have made the required certification concerning the necessity of the loan request in good faith.”
The same FAQ also clarifies that those receiving PPP loans greater than $2 million also “may still have an adequate basis for making the required good-faith certification, based on their individual circumstances in light of the language of the certification and SBA guidance.”
Finally, there is further clarity offered on the SBA’s enforcement actions whenever it finds that a borrower was not justified in making the required certification for eligibility: “SBA will seek repayment of the outstanding PPP loan balance and will inform the lender that the borrower is not eligible for loan forgiveness. If the borrower repays the loan after receiving notification from SBA, SBA will not pursue administrative enforcement or referrals to other agencies based on its determination with respect to the certification concerning necessity of the loan request.”
This is a breaking story and will continue to be updated as more developments unfold. Organizations should seek professional counsel on the application of this guidance to their specific circumstances.
Click here to read the full FAQ released on May 13
This text is provided with the understanding that the Board of Retirement is not rendering legal, accounting, or other professional advice or service. Professional advice on specific issues should be sought from an accountant, lawyer, or other professional.
