NEWS FLASH: The SBA will consider any Payroll Protection Program loans issued for less than $2 million by definition to have been made in good faith. This new rule was issued MAY 13, 2020.

This is a HUGE win for small businesses!

Why is that an issue?

When submitting a PPP application, solo and small firm borrowers must certify that “current economic uncertainty makes this loan request necessary to support their ongoing operations.” This raised a lot of question and concerns for my clients because the penalties can be severe.

For example:

What does “necessary” mean?

What if you thought the funds would be needed … but then didn’t?

What if the SBA disagrees with your evaluation of “necessary”?

The penalties can mean $250K in fines and serious jail time for false statements.

BUT NOW, it will be assumed that if you got a loan for less than $2 million – you truly needed it. The SBA will not be auditing those smaller loans to determine if they met the “necessary” requirement.

In this short video, I share three significant reasons the SBA is taking this approach.

1. They recognize small businesses have less access to capital
2. They want to promote economic certainty
3. The need to conserve audit resources

Here’s a link to the most recent update of SBA’s FAQs regarding the PPP:

https://bit.ly/PPPLoanFAQs

These evolve with time, so keeps your eyes open for updates!

And keep track of how you’re spending the funds. Those requirements have not yet changed.