On April 23, 2020, the U.S. Department of Treasury (Treasury) issued an updated FAQ (the Updated Guidance) with one additional Q and A (Q31) that addresses the required certification that “current economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant.” The Updated Guidance emphasizes that a borrower must assess its economic need for a PPP loan at the time of its application in addition to reviewing applicable affiliation rules to determine eligibility.

Based on the Updated Guidance, a borrower must take the following into account in certifying that the PPP loan is necessary:

• The borrower’s current business activity; and
• The borrower’s ability to access other sources of capital/liquidity sufficient to support ongoing operations in a manner that is not significantly detrimental to the borrower’s business.

As an example, Treasury provides that “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.”

For businesses that have already received a PPP loan, the Updated Guidance states that “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.”