Updated PPP Conditions for Borrowers

By Markham Norton Mosteller Wright & Co., P.A

Government guidance regarding the Paycheck Protection Programs (PPP) has continually been updated since the initial CARES ACT signing. There are new PPP certifications that have been issued which are to be applied to the initial effective date. We would like to share the following information based on the recent releases.

Loan qualification – There are new guidelines related to the definition of economic need for the PPP loan. When completing the loan application, borrowers certified in good faith at the time of the PPP loan application that the current economic uncertainty makes the loan request necessary to support ongoing operations of the applicant.  The additional guidance to this certification states that in good faith they have reviewed their business activity and their ability to access other sources of liquidity to be eligible for the PPP loan.

Did the borrower have sufficient access to working capital, owner funds, a line of credit, accounts receivable or income to support their ongoing operations in a manner that is not significantly detrimental to the business?  Lenders may rely on the borrowers certification regarding the necessity of the loan request. Any borrower that applied for a PPP loan prior to the issuance of this guidance, and feels that they have sufficient access to working capital, and repays the loan in full by May 7th, 2020 will be deemed by the SBA to have made the required certification in good faith.

The SBA, in consultation with the Department of the Treasury will review all loans in excess of $2 million, in addition to other loans as appropriate, following the lender’s submission of the borrower’s loan forgives application. Additional guidance implementing this procedure will be forthcoming.

Guidelines and Frequently Asked Questions (FAQ) relating to the PPP loan are continually updated by the government. These are posted regularly to our website as we receive them to provide you with the most current information. We are waiting for additional clarification regarding the forgiveness rules and will post these as part of the FAQ as soon as they are available.