WASHINGTON—There will be no audits of any loans of less than $2 million made through the Paycheck Protection Program (PPP), according to newly released updated FAQs.
The issue of complying with the terms necessary to qualify for forgiveness of PPP loans has been hanging over both borrowers and lenders. Now, the SBA said, any company approved for a loan below that threshold "will be deemed to have made the required certification concerning the necessity of the loan request in good faith."
The SBA added it has “determined that this safe harbor is appropriate because borrowers with loans below this threshold are generally less likely to have had access to adequate sources of liquidity in the current economic environment than borrowers that obtained larger loans.”
The SBA had previously asked borrowers to assess their economic need for a PPP loan (Question No. 31). Those that did not meet the required certification in good faith were to repay their loan in full by Thursday, May 14 (Question No. 43).
For loans of more than $2 million, the new FAQs also provide direction on how those borrowers can make the required good-faith certification and what to do if the SBA determines the loans were not obtained in good faith during its review. For lenders, the SBA clarifies that its determination of the necessity of a loan request will not impact its loan guarantee.
The Treasury Department has not released details around the kind of audit it plans to conduct on loans of more than $2 million,
House Holds Virtual Forum
The announcement comes at the same time the House Small Business Committee held a virtual forum with lenders and businesses to discuss the PPP’s impact and areas that still need to be addressed. Many of the issues aligned with the recent Office of Inspector General report that identified areas that need more guidance and clarity, NAFCU noted.
The panelists stressed that more guidance is needed, especially as it relates to loan forgiveness as many borrowers are fearful they will be burdened with large amounts of debt.