Certifying Economic Need for PPP Loans and Extension of Safe Harbor Repayment Date
On April 23, 2020, the SBA issued FAQ #31, cautioning PPP borrowers that they need to review the required certification that “the uncertainty of current economic conditions make necessary the loan request to support the ongoing operations of the eligible recipient.” FAQ #31 also provided a safe harbor indicating that borrowers who applied for a PPP loan prior to April 24, 2020 and who wish to reconsider their certifications may repay the loan in full by May 7, 2020 and then they would be deemed to have made the certification in good faith. Many companies are in the process of reassessing whether they met this the economic need standard (see (https://www.hklaw.com/en/insights/publications/2020/04/key-factors-for-companies-to-consider-when-certifying-their-ppp-need) prior to this repayment deadline.
On May 5, 2020, the SBA issued FAQs #43 and extended the safe harbor repayment deadline from May 7, 2020 to May 14 , 2020.