May 14, 2020

SBA Announces Safe Harbor Presumption for PPP Loans Under $2 million

On April 23, 2020, the SBA released FAQ #31, providing that “Borrowers must make this certification in good faith, taking into account their current business activity and their ability to access other sources of liquidity sufficient to support their ongoing operations in a manner that is not significantly detrimental to the business.” On April 29, 2020, the SBA announced in FAQ #39 that they will be reviewing all loans greater than $2 million, in addition to other loans as appropriate for compliance with the PPP program requirements.

On May 13, 2020, the SBA released FAQ #46, providing a safe harbor presumption that “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.”

FAQ #46 further clarifies that if the SBA determines in the course of its review of a loan application greater than $2 million that a borrower lacked an adequate basis for the required necessity certification, the 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, the 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.

The guidance arrives just before the May 14, 2020 safe harbor deadline for PPP borrowers who did not meet the necessity test to return funds.

Please contact a Kerr Russell attorney today for more information about the Paycheck Protection Loan Program.

John D. Gatti is a Certified Public Accountant as well as an attorney. He concentrates his practice in the areas of taxation, mergers and acquisitions, business law, real estate law, and estate planning. John also serves as the firm’s administrative partner and chairs the firm’s Taxation Practice Group. He has considerable experience representing professional services firms. These include accounting, engineering, and architectural firms, as well as insurance agencies, in purchase and sale transactions.


Kevin T. Block focuses primarily on business law, including business transactions, real estate and secured financing. He handles matters related to real estate, finance, lease and purchase and sale transactions, mergers, acquisitions and dispositions, entity formation, commercial contracts and lien rights enforcement. He additionally represents commercial lenders, as well as borrowers in credit transactions. Kevin also specializes in business entity formation, drafting and negotiating business contracts, and business planning.


Close up of Richard C. Buslepp, attorney at Kerr RussellRichard C. Buslepp is a Certified Public Accountant as well as an attorney. He focuses his practice on business and corporate law, mergers and acquisitions, tax, opportunity zones and qualified opportunity funds, estate planning, and real estate. Richard specializes in structuring, negotiating, and consummating complex domestic and cross-border transactions such as stock and asset sale transactions, leveraged buyouts, mergers, recapitalizations, divestitures, take-privates, joint ventures, debt and equity finance transactions, management led buyouts, real estate transactions and restructure transactions for private equity, public, non profits, and family owned clients.

Headshot of Cody Attisha of Kerr RusellCody Attisha focuses on taxation law, corporate law, mergers and acquisitions, finance, and estate and trust planning. He also helps clients with entity formation, including evaluating, choosing, and implementing the right partnership, corporate, or non-profit structure.

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