After months of ambiguous and constantly-shifting guidance, the Small Business Administration (SBA) has finally published information hinting at how it will determine whether Paycheck Protection Program (PPP) borrowers certified in good faith that economic uncertainty made the PPP loans necessary. As we noted in May, SBA walked back what borrowers perceived as threats of prosecution for inadvertently making certifications of economic uncertainty, and provided safe harbors for loans under $2 million and for borrowers that made erroneous certifications in good faith. However, the clarifications remained vague. A recent announcement by the SBA suggests that it will be looking closely at a borrower’s performance after receiving the PPP funds, but it remains unclear what impact those factors will have on determining whether the borrower made its representation of economic uncertainty in good faith. Read more.
Jacob W. Scott, Of Counsel
Erik M. Coon, Associate