In the wake of media reports of some firms qualifying for Paycheck Protection Program loans despite having access to capital markets or ongoing revenue streams, the Small Business Administration today emphasized that companies seeking PPP funding must provide a good-faith certification of their economic need.
While noting that each business must make its own assessment of economic need for a PPP loan, the SBA updated its frequently asked questions to say that “it is unlikely that a public company with substantial market value and access to capital markets will be able to make the required certification in good faith, and such a company should be prepared to demonstrate to SBA, upon request, for the basis of its certification.”
SBA also clarified that borrowers that applied for a PPP loan prior to the issuance of the new guidance and repays the loan in full by May 7, 2020, “will be deemed by SBA to have made the required certification in good faith.”
