Update – The SBA has again extended the deadline by which borrowers of Paycheck Protection Program loan funds may repay the loans in full and be deemed by the SBA to have "made the [borrower] certification in good faith."
The new safe harbor deadline is Monday, May 18, 2020.
On May 8, 2020, the Small Business Association (SBA) issued another interim final rule relating to the CARES Act Paycheck Protection Program and FAQ No. 43, which formally extends the safe harbor period from May 7 to May 14, 2020.
The CARES Act requires that PPP applicants certify that "[c]urrent economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant." Subsequently, on April 23, the SBA issued guidance in the form of FAQ No. 31, requiring that borrowers making this certification also take into account "their current business activity and their ability to access other sources of liquidity sufficient to support their ongoing operations." FAQ No. 31 also provided that borrowers who applied for PPP loans prior to the issuance of the guidance and repaid the loan by May 7, 2020 would be "deemed by the SBA to have made the certification in good faith." On April 24, the SBA issued an interim final rule formalizing the safe harbor provision, and again noting that the SBA will consider any borrower that repays the PPP loans by May 7, 2020 to have made the certification in good faith. (For additional information regarding the certification and guidance, see our alert here.)
On May 5, the SBA announced through additional FAQs that it was extending the safe harbor period for one week, to May 14, 2020. On May 8, the SBA issued another interim final rule formally extending the safe harbor period to May 14, and promising that the SBA will issue additional guidance before May 14 explaining "how SBA will review the required certification to help PPP borrowers evaluate whether they have misunderstood or misapplied the statutory certification standard."