COVID-19 UPDATE 26
URGENT URGENT URGENT
RECENT SBA ANNOUNCEMENT REQUIRES PPP LOANEES/GRANTEES TO MAKE LOAN REPAYMENT DECISION BY MAY 7, 2020!!!!
URGENT WEBINAR SCHEDULED TO DISCUSS THIS MATTER
The U.S. Treasury recently announced new guidelines regarding its Paycheck Protection Program (PPP). The new guidance is to assure that the federal PPP loans went to companies that have faced imminent “significantly detrimental” financial harm.
Businesses receiving loans in excess $2 million will be subject to audit
!
Very little guidance was provided to first round borrowers regarding what qualified as “economic need” or certification to “the uncertainty of current economic conditions”. Of great concern was the Treasury Department’s latest guidance in its FAQ 31 posted several days ago. Below is Question 31:
31.
Question
:
Do businesses owned by large companies with adequate sources of liquidity to support the business’s ongoing operations qualify for a PPP loan?
Answer
:
In addition to reviewing applicable affiliation rules to determine eligibility, all borrowers must assess their economic need for a PPP loan under the standard established by the CARES Act and the PPP regulations at the time of the loan application. Although the CARES Act suspends the ordinary requirement that borrowers must be unable to obtain credit elsewhere (as defined in section 3(h) of the Small Business Act), borrowers still must certify in good faith that their PPP loan request is necessary. Specifically, before submitting a PPP application, all borrowers should review carefully the required certification that “[c]urrent economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant.” Borrowers must make this certification in good faith, taking into account their current business activity and their ability to access other sources of liquidity sufficient to support their ongoing operations in a manner that is not significantly detrimental to the business. For example, it is unlikely that a public company with substantial market value and access to capital markets will be able to make the required certification in good faith, and such a company should be prepared to demonstrate to SBA, upon request, the basis for its certification. Lenders may rely on a borrower’s certification regarding the necessity of the loan request. Any borrower that applied for a PPP loan prior to the issuance of this guidance and repays the loan in full by May 7, 2020 will be deemed by SBA to have made the required certification in good faith.
The Treasury Department has set a “safe harbor date" of Thursday, May 7, 2020 for borrowers to pay back the loan without any liability.
A webinar has been scheduled for 10:30am – 11:30am on Tuesday, May 5, 2020
with legal and accounting experts to explain Treasury’s new requirements and the safe harbor provisions, if needed by borrowers, offered by the U.S. Treasury.
Our speakers will be:
- Jack Callahan CohnReznik
- Bill McNamara The Curchin Group
- Seth Tipton Florio Perrucci Steinhardt Cappelli Tipton & Taylor
Our panelists will also discuss what is known on the latest development about non-deductibility of loan amounts forgiven.
Please be sure to download the Zoom App on your computer or cell phone prior to the start of this meeting. The device you use should have a video camera and audio capability.
To receive a Calendar Invite with the webinar details, please send your name, company and email to
lauren@utcanj.org
