After many Paycheck Protection Program (PPP) loans had been received, the SBA threatened penalties based upon borrowers certifying the loan is necessary to support ongoing operations. With the deadline for returning the loan tomorrow, the SBA provided welcome guidance greatly reducing any threat that businesses will be penalized for obtaining PPP loans. Borrowers receiving less than $2 million are entitled to a safe-harbor deeming them to have made this certification in good faith. Further, although borrowers receiving more than $2 million are subject to review based upon their individual circumstances, if an adequate justification for the PPP loan does not exist, the borrower will have the opportunity to repay the loan without penalty or enforcement.

Any businesses on the fence about whether to keep their PPP loan should review the SBA’s favorable FAQ 46. Additional benefits / programs are available for businesses ineligible for a PPP loan, including access to the Employee Retention Credit.