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Important Update on Borrower’s PPP “Need” Justification – 5/13/20 2:35 PM

There was an important SBA update today in the form of an additional FAQ regarding the SBA’s potential review of a borrower’s “good faith” certification covering the necessity of their loan request.

FAQ #46 (see below) states that: “any borrower that….. received PPP loans with an original principal amount of less than $2 million, will be deemed to have made the required certification concerning the necessity of the loan request in good faith”. This means that they will accept the certification for the loan necessity without the apparent review of whether there was an actual need for the loan as long as the PPP loan principal was under $2 million.

This should remove some of the concern, but it goes on to say: “ [The] SBA has previously stated that all PPP loans in excess of $2 million, and other PPP loans as appropriate, will be subject to review by SBA for compliance with program requirements set forth in the PPP Interim Final Rules…”.

The phrase “and other PPP loans as appropriate” is a little vague and would seem to be reserving the possibility that any loan can be reviewed or audited.