Paycheck Protection Program Safe Harbor Guidance

On May 13, 2020, the Treasury issued guidance regarding the Paycheck Protection Program (PPP) safe harbor requirement that borrowers make a good faith certification that "Current economic uncertainty makes the loan request necessary to support the ongoing operations of the Application," and the SBA extended the loan repayment date to May 18, 2020.

Loans Less Than $2 Million

Borrowers (together with its affiliates) with PPP loans less than $2 million will be considered to have made the loan certification in good faith. The SBA determined that borrowers of these loans are less likely to have access to adequate sources of liquidity and that the loan will provide borrowers the funds necessary to retain and rehire workers.

Loans Greater Than $2 Million 

Borrowers with loans greater than $2 million that do not satisfy the safe harbor, may still have an adequate basis for making the required good faith certification based on their individual facts and circumstances. If during the review, the SBA determines the borrower lacked sufficient basis for the required certification concerning the necessity of the loan, the borrower will need to repay the loan and will not be eligible for forgiveness. If the borrower repays the loan after receiving notification from the SBA, the SBA will not pursue administrative enforcement. 

We recommend that borrowers with loans over $2 million continue to document their loan certification rationale. 

Loan Forgiveness

As a reminder, to maximize your loan forgiveness, you must spend during the eight-week period at least 75% of the disbursement on payroll costs and the remainder on mortgage interest payments, rent, and utilities. The 8-week period begins the day you receive the funds.

Although we are waiting for additional forgiveness guidance, we want to emphasize the importance of putting the right loan forgiveness strategy in place for your unique situation. We are here to help you:

• Analyze your headcount
• Assist in documentation of payroll costs and other eligible cost
• Loan and business strategies
• Advise on human resource matters

Contact your Whittlesey advisor for assistance with maximizing your loan forgiveness and loan certification documentation.