New PPP Guidance Provides Good Faith Harbor for Loans Less Than $2M

Date: May 19, 2020

The Small Business Administration published new guidance on May 13 for the Paycheck Protection Program (PPP) to improve control of the distribution of loans based on economic need. Under the new guidelines, the Small Business Administration (SBA) will consider requests of less than $2 million dollars to have been made in good faith and therefore not be subject to further review. Loans greater than $2 million will be subject to review, where the SBA could conclude that borrowers making such a loan request “have an adequate basis” to do so. If that is not the case, “SBA will seek repayment of the outstanding PPP loan balance and will inform the lender that the borrower is not eligible for loan forgiveness.”

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