loan forgiveness payment protection program

Less than $2 Million Borrowed? Yes, You Meet the Good-Faith Certification Test

Many business owners were nervous about taking the PPP loan because it was unclear if you could demonstrate the need for a loan if you had reserves to get through the crisis without it. The SBA has now made it clear that if you received less than $2 million, it is automatically deemed that you met the required good faith need certification test. They’ve made this blanket statement, since most smaller businesses don’t have access to the level of capital they would have required.

Here’s the exact language from recently released FAQs from SBA:

  1. Question: How will SBA review borrowers’ required good-faith certification concerning the necessity of their loan request?Answer: When submitting a PPP application, all borrowers must certify in good faith that “current economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant.” SBA, in consultation with the Department of the Treasury, has determined that the following safe harbor will apply to SBA’s review of PPP loans with respect to this issue: Any borrower that, together with its affiliates [see note], 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.

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