Since the CARES Act suspended the typical federal funding requirement that borrowers must be unable to obtain credit elsewhere, the Paycheck Protection Program (PPP) was open to a wider range of businesses.
The U.S. Small Business Administration (SBA) issued new guidance today in an effort to ensure the next round of PPP funds (currently being negotiated by Congress) flows to the small businesses that need it the most.
Before submitting a PPP application, the SBA advised that borrowers should carefully review the required certification that the loan is necessary to support ongoing operations. Public companies with access to capital markets and large organizations with liquidity options will most likely not be able to make this certification in good faith. If they do apply, these companies should be prepared to demonstrate, at the SBA’s request, their basis for the certification.
If your business applied for a PPP loan and cannot demonstrate this need, you should cancel the loan as soon as possible. Any such borrower who received PPP funds prior to this guidance and repays the loan in full by May 7, 2020 will be deemed by the SBA to have made the required certification in good faith.
If you have any questions about your qualifications for a PPP loan under this new guidance, please contact your Grassi Advisor or our Crisis Response & Recovery hotline at 212.223.6216 or firstname.lastname@example.org.