Update: Paycheck Protection Program – Good-Faith Certification

In Coronavirus by Phyllis Ludwig

The Paycheck Protection Program has been a critical lifeline for many businesses during the current economic crisis. However, for a multitude of reasons, the requirements concerning the program have been a moving target. An area of great concern for many organizations is the good-faith certification.

The CARES Act set the certification requirement for the program quite low. The original text from the Act states a loan recipient need to make a good-faith certification that “the uncertainty of current economic conditions justifies the loan request”. This threshold during a pandemic invited virtually every business to apply to the program.

As the first loans were being approved, the understanding of the good-faith certification changed. The Small Business Association (SBA) and others chastised companies for accepting loans while also having access to other forms of capital. Debate ensued and confusion quickly became pervasive throughout the business community regarding the program requirements. Over the next few weeks companies deliberated on whether to return the funds.

Yesterday, the SBA provided definitive guidance regarding how they will review borrowers’ required good-faith certification. Here are the important points from the latest guidance:

PPP Borrowers Receiving less than $2 Million

“Any borrower that, together with its affiliates, received PPP loans with an original principal amount of less than $2 million will be deemed to have made the required certification concerning the necessity of the loan request in good faith.”


PPP Borrowers Receiving more than $2 Million

“[B]orrowers with loans greater than $2 million that do not satisfy this safe harbor may still have an adequate basis for making the required good-faith certification.”

“[A]ll PPP loans in excess of $2 million […] will be subject to review by SBA for compliance with program requirements.”

“If SBA determines in the course of its review that a borrower lacked an adequate basis for the required certification concerning the necessity of the loan request, SBA will seek repayment of the outstanding PPP loan balance and will inform the lender that the borrower is not eligible for loan forgiveness. If the borrower repays the loan after receiving notification from SBA, SBA will not pursue administrative enforcement or referrals to other agencies based on its determination with respect to the certification concerning necessity of the loan request.”


This guidance will go a long way to help ease the minds of many business owners who desperately need these funds to maintain their business and to keep their employees.

In the next few days, we are also expecting to receive additional guidance regarding the forgiveness portion of the Paycheck Protection Program. Be sure to check back regularly for the latest guidance. We remain committed to our clients and our community in these challenging times. For a more in-depth discussion on how we can help you navigate your business through the current economic climate feel free to contact us. Together we will create the confidence your business needs.