SBA Updates Guidance on Payroll Protection Program Compliance
On May 13, 2020, the SBA, in consultation with the Department of the Treasury, updated its Frequently Asked Questions to include a new Question 46 that provides additional guidance about the certification needed to prove that the funds were necessary in order to maintain payroll and thus eligible for forgiveness.
Loans under $2 million (when aggregated with borrowings of affiliates) will be deemed to have made the necessity certification in good faith. No further testing is thus required.
Loans of $2 million or more (again when aggregated with borrowings of affiliates) can still meet the requirements, but will need good documentation. Secretary Mnuchin has indicated all such loans will be audited. The SBA notice, however, adds that if certification requirements are not met and there is no forgiveness, there will be no additional administrative enforcement or referrals.