On May 13, 2020, the Small Business Administration (“SBA”) released awaited guidance on how they intend to review a borrower’s required good-faith certification concerning the necessity of their loan request.

When applying for a Paycheck Protection Program (“PPP”) loan, a borrower must certify in good faith that “[c]urrent economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant.”  The SBA has established the following “safe harbor” for borrowers with respect to this certification.

Question #46 of the SBA’s updated FAQ provides in relevant part:

“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.”

Question #46 further states that borrowers with loans greater than $2 million 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.  In the event that the SBA determines that a borrower receiving a loan of $2 million or more lacked an adequate basis for the required certification concerning the necessity of the loan request, the SBA will inform the lender that the borrower is not eligible for loan forgiveness, and if the borrower repays the loan, the SBA has indicated that it will not pursue administrative enforcement or referrals to other agencies.

Further, the interim final rule posted on May 8, 2020 provided that any borrower that applied for a PPP loan and repays the loan in full by May 14, 2020 will be deemed by the SBA to have made the required certification concerning the necessity of the loan request in good faith. By FAQ#47, the SBA has extended that date to May 18, 2020 to give borrowers an opportunity to review and consider FAQ #46. Borrowers do not need to apply for this extension.

Please continue to monitor our Coronavirus (COVID-19) Resource Center for updates concerning COVID-19. If you have specific questions regarding PPP loans, please contact any member of our PPP Team: Julie C. FayDonna L BrooksKathleen M. MylodJames C. SchulwolfMichael J. FritzDormer StephenKent S. NevinsLisa M. ZanaGreg Muccilli and Tyler J. Bischoff.

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Photo of Donna L. Brooks Donna L. Brooks

In addition to representing businesses in diverse industries as “outside” general counsel, Donna represents independent schools, colleges and universities. Donna counsels educational institutions on general contracting matters, governance issues, joint ventures, affiliations, mergers and acquisitions, finance, endowment and charitable giving matters and related…

In addition to representing businesses in diverse industries as “outside” general counsel, Donna represents independent schools, colleges and universities. Donna counsels educational institutions on general contracting matters, governance issues, joint ventures, affiliations, mergers and acquisitions, finance, endowment and charitable giving matters and related investment management.

Photo of Julie C. Fay Julie C. Fay

Julie represents public and independent schools in a variety of special education and general education law matters, with a particular focus on issues relating to students with disabilities, student discipline, confidentiality, school governance and policy. Julie frequently represents schools in administrative hearings, including…

Julie represents public and independent schools in a variety of special education and general education law matters, with a particular focus on issues relating to students with disabilities, student discipline, confidentiality, school governance and policy. Julie frequently represents schools in administrative hearings, including expulsion hearings, special education due process hearings and related proceedings, and is often called upon to guide districts in drafting policies and administrative procedures in all education law areas. As part of her practice, Julie has conducted numerous professional development workshops for clients and other school organizations.

Photo of Tyler Bischoff Tyler Bischoff

Tyler Bischoff is a member of the firm’s School Law Practice Group, where he advises public school districts on a variety of general education, special education and labor and employment issues.

Prior to joining Shipman & Goodwin, Tyler served as a law clerk…

Tyler Bischoff is a member of the firm’s School Law Practice Group, where he advises public school districts on a variety of general education, special education and labor and employment issues.

Prior to joining Shipman & Goodwin, Tyler served as a law clerk for the Honorable Christine E. Keller of the Connecticut Appellate Court. Prior to law school, Tyler worked as a college admissions counselor at a private university. While in law school, he served as a judicial extern for the Honorable Bruce M. Selya of the United States Court of Appeals for the First Circuit and an intern for the U.S. Attorney’s Office for the District of Rhode Island.