In what might be a classic “now you tell me” scenario, the SBA issued a new rule May 21 saying that if an applicant failed to count the employees of its foreign affiliates when it was determining its eligibility, the SBA will not hold that against the applicant so long as the application was submitted before the SBA clarified that requirement.
The problem with that, however, is that because the safe harbor ended May 18, it’s highly likely that a lot of those businesses already gave their PPP loan back. They’d be forgiven for thinking they had to, as earlier this month Sen. Marco Rubio was indicating that Congress would investigate companies who took PPP funds for which they weren’t eligible.
**UPDATE 5/14/20:Since publication of this post, the SBA has now updated the PPP Safe Harbor deadline to May 18. This post has been updated to include this additional information.
Just hours before the first extended May 14 deadline for businesses to return “unnecessary” Paycheck Protection Program loans without penalties, the SBA has published new guidance on how it will review borrowers’ required good-faith certifications.
As we said in this space a few days ago, the SBA has put in place a safe harbor until May 14 for companies to return Paycheck Protection Program loan money if they find they don’t need it. No harm, no foul.
So, what happens if they don’t need it, but don’t return it? Maybe Clubber Lang said it best.
On Monday, May 4, the SBA will issue another Interim Final Rule updating the Paycheck Protection Program—this time limiting the “aggregate amount of PPP loans that any single corporate group may receive.”
**Update 5/6/2020: As of May 5, the SBA updated its PPP FAQ’s, announcing its intention to extend the PPP Safe Harbor period to May 14. This post has been updated to reflect this change.
***Update 5/14/2020: As of May 14, the SBA updated its PPP FAQ’s once again, announcing its intention to extend the PPP Safe Harbor period to May 18. This post has been updated a second time to reflect this change. The SBA has also supplemented its guidance on the Safe Harbor Provision, as discussed here.
If you’re a parent, you might be familiar with the SBA and Treasury Department’s current strategy to crack down on businesses taking Paycheck Protection Program funds when they don’t qualify: if ineligible businesses ‘fess up and return the money by May 14, nobody gets in trouble.
As the social isolation saying goes: “Another day; another clarification from the SBA regarding the Paycheck Protection Program.” Alright, maybe that saying hasn’t caught on, yet. Nevertheless, the SBA did publish additional guidance specific to sole proprietors and general partners applying to the Paycheck Protection Program (PPP).