Update regarding PPP Loans: “Safe Harbor” expires May 14, 2020
By Whitney Harper
Although the initial legislation regarding PPP Loans indicated that all businesses were presumed to be adversely impacted by COVID-19 and therefore eligible for the funds, the SBA has now indicated that more stringent criteria will apply for all borrowers, and that it will review all loans of $2m or more (and others as appropriate).
SAFE HARBOR ENDS MAY 14: Borrowers that determine they do not meet the more stringent criteria and return PPP Loan funds by May 14, 2020 will be considered to have applied in good faith, and covered by a “safe harbor”.
**We expect to receive additional guidance from SBA prior to May 14 regarding the application of the new criteria, and will alert you as that information becomes available.**
Visit our Resources Page to access up-to-date, curated guidance regarding COVID-19 Relief Programs (including current criteria for PPP Loans) and Returning to Work Following COVID-19.
Note that there are also updates regarding tax deductions for expenses paid with PPP Loans, and forgivability with respect to employees who refuse offers of rehire. These items are reflected in the updated information available on our Client Resources Page.
Immediate Action Items:
- Analyze your need for the PPP Loan under the new standard, including the impact of COVID-19 on your business, effect of economic uncertainty, and your access to other sources of liquidity
- Document your analysis
- Document your determination regarding keeping or returning the PPP Loan through Board consents
As always, you are welcome to call your ADVOS lawyer with any questions you have about the COVID-19 Relief Programs or returning to work following COVID-19. We’re in this together and are on-call for you.
In your corner,
Whitney (+ the ADVOS team)