PPP Safe Harbor

PPP Safe Harbor

As of May 13th, the SBA has released good news for small business owners! If your PPP loan was less than $2 million, the SBA has determined that you generally were less likely to have had access to adequate sources of funds. They have announced a safe harbor and will not be auditing your self-certification.

Official SBA Documentation

This is according to the official documentation.

Question: How will SBA review borrowers’ required good-faith certification concerning the necessity of their loan request?

Answer: When submitting a PPP application, all borrowers must certify in good faith that “[c]urrent economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant.” SBA, in consultation with the Department of the Treasury has determined that the following safe harbor will apply to SBA’s review of PPP loans with respect to the issue: Any borrower that, together with its affiliates, received PPP loans with an original principle 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.

SBA has determined that this safe harbor is appropriate because borrowers with loans below this threshold are generally less likely to have had access to adequate sources of liquidity in the current economic environment than borrowers that obtained larger loans. This safe harbor will also promote economic certainty as PPP borrowers with more limited resources endeavor to retain and rehire employees. In addition, given the large volume of PPP loans, this approach will enable SBA to conserve its finite audit resources and focus its review on larger loans, where the compliance effort may yield higher returns.

Small Business Owners

Being removed from the auditing process creates some relief for small business owners who received PPP loan funding and allows them to focus more on rebuilding. However, it is still important to carefully track the use of PPP funds both because the legitimate uses are limited and because if used appropriately, the loan can be partially or fully forgiven. Please contact our Coronavirus Response Team by emailing [email protected] if you have questions or need help.

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