Paycheck Protection Program Certification Deadline May 14

On May 5, the Treasury issued guidance which extends the safe habor date to May 14, for borrowers to return Paycheck Protection Program (PPP) funds if they cannot certify that "Current economic uncertainty makes the loan request necessary to support the ongoing operations of the Application." Borrowers do not have to apply for an extension. The SBA intends to provide additional guidance on how to review the certification before May 14, 2020. 

As a reminder, borrowers are required to reassess their current economic need and make a good faith certification that that they need the PPP loan to support normal operations, and that they did not have access to other sources of liquidity to continue ongoing operations, without harming their business. If this statement is no longer valid, borrowers can return PPP loans to their lending institutions until May 14, 2020 without penalties. Inaccurate certifications run the risk of potential criminal liability for fraud. 

Recommendations

The new guidance still does not contain the level of detail necessary to determine PPP eligibility with certainty. With questions around how these requirements will be determined and enforced, we recommend that borrowers document their loan certification rationale and not make a final decision until further guidance is issued. 

Borrowers' good faith certifications are influenced by facts and circumstances unique to their situation. We encourage borrowers to record answers to open and close-ended questions, gather financials, and model various short-term and long-term scenarios. 

Questions:

• What trends do I see happening in my industry, are or will there be supply chain disruptions?
• Are my employees at risk of contracting COVID-19, and what will happen if I need to shut down operations due to illness?
• What is my current business activity today, and what do my 8-week, 4-month, and end of year projections look like?
• Do I have the ability to access other sources of liquidity to support ongoing operations that is not significantly detrimental to my business, such as the ability to carry other debt or raise capital from owner contributions?

 Financial Scenarios:

• Prepare and compare monthly financial statements to last year's financial statements and budgets
• Prepare and compare actual and projected cash position and cash flow forecasts to last year's
• Prepare and compare actual and projected collections and accounts receivables forecasts to last year's

We will update you when we receive additional guidance. 

Contact your Whittlesey advisor for assistance with your loan certification documentation. May 14 will be here before you know it.