In connection with the application process for a Paycheck Protection Program (“PPP”) loan, borrowers are required to certify in good faith that “current economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant.” As discussed in our prior Client Alert, the U.S. Small Business Administration (“SBA”) published guidance on April 23, 2020 providing that, if a borrower who applied for a PPP loan prior to the issuance of such guidance elects to repay the loan in full by May 7, 2020, the foregoing certification will be deemed by the SBA to have been made in good faith.
On May 5, 2020, the SBA extended this safe harbor deadline from May 7, 2020 to May 14, 2020. In addition, the SBA stated that it intends to issue additional guidance regarding “how it will review the certification” of a borrower’s economic need prior to the new May 14, 2020 deadline.
Based on SBA reporting through May 1, 2020, in the second round of PPP loan funding, approximately 2.2 million loans have been approved for an aggregate total of nearly $176 billion. The average loan size for these second round loans is $79,000.