In a posting to their Paycheck Protection Program (PPP) FAQ document on April 23rd, the Treasury Department added Question 31 which addresses whether large companies with adequate sources of liquidity to support the business’s ongoing operations qualify for PPP loans. They state that “borrowers must make this certification in good faith, taking into account their current business activity and their ability to access other sources of liquidity sufficient to support their ongoing operations in a manner that is not significantly detrimental to the business.” Additionally, the Treasury Department added an “amnesty period” whereby any business that took a loan prior to the issuance of 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.
Given the media scrutiny of the PPP program and in light of the resulting heightened interest and additional guidance from the Federal government, it is advisable that all PPP loan recipients re-evaluate the criteria on which they based their original loan decision. We recommend engaging legal counsel to evaluate the impact of this new language on your original application. For further reference, the Treasury Department PPP FAQ document can be accessed here.