Since our post yesterday, the SBA has once again updated the safe harbor deadline for paying back Paycheck Protection Program loans to Monday, May 18.
As a quick reminder of what we discussed more in depth here, on April 28, the SBA published an interim rule on the PPP, which included a “Limited Safe Harbor with Respect to Certification Concerning Need for PPP Loan Request.” Businesses applying for PPP loans are required to certify that the “[c]urrent economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant.” Because many applicants misunderstood or misapplied the relatively undefined certification, the SBA originally gave PPP loan recipients until May 7 to return their loans, no questions asked, if they had made the certification incorrectly.
On May 5, confusion remained- so the SBA updated its PPP FAQs, extending the payback deadline to May 14 and promising additional guidance about the safe harbor before the deadline. Yesterday, May 13, the promised additional guidance concerning the good-faith certification was published as Question 46, as we discussed here.
The SBA also added Question 47 to its FAQs. Question 47 asks: “An SBA interim final rule posted on May 8, 2020 provided that any borrower who applied for a PPP loan and repays the loan in full by May 14, 2020 will be deemed by SBA to have made the required certification concerning the necessity of the loan request in good faith. Is it possible for a borrower to obtain an extension of the May 14, 2020 repayment date?” Short answer: YES.
The SBA responded that it is “extending the repayment date for this safe harbor to May 18, 2020, to give borrowers an opportunity to review and consider FAQ #46.” In addition, “[b]orrowers do not need to apply for this extension.” Finally, the SBA states that the “extension will be promptly implemented through a revision to the SBA’s interim final rule providing the safe harbor.” Given that the previous extension was never formally implemented (as the updated interim rule including the extension to May 14 was marked for publication in the Federal Register on May 13, but quickly withdrawn), we will see whether these revisions make it through in time.
In any case, for anyone concerned about returning your PPP loan, breathe (a little) easier–you now have until Monday, May 18! You should still get in touch with your lender ASAP. If you have any questions about this post, or any of the previous posts discussing the safe harbor provision, its updates, or any other matter related to federal government contracting, email us!