We've had this conversation with our clients a lot. What constitutes "economic uncertainty" when certifiying that your PPP loan request was necessary to support your ongoing operations? No one has a crystal ball. Some businesses fared better than others over the last 6 weeks, but no one knows for certain what "economic uncertainty" lies ahead of us. It was a big dilemma-- do I pay back the money or do I take my chances?
Yesterday, on the cusp of their 5/14 deadline to return the funds, the SBA provided concrete guidance to those with loans less than $2MM, by providing a safe harbor. The SBA, in their Frequently Asked Questions Document reasoned, that businesses with loans of under $2MM "are generally less likely to have had access to adequate sources of liquidity in the current economic environment than borrowers that obtained larger loans." However if you have a loan over $2MM the SBA will be scrutinizing it and will pursue enforcement if you lacked the basis for the loan. If you feel you do not meet these requirements, and you pay the loan back before the new extended deadline of 5/18/2020, then you will be deemed by SBA to have made the required certification in good faith.
In an important update released yesterday, businesses who calculated their loan values prior to additional guidance released by the SBA can qualify for loan INCREASES. For partnerships that did not include any compensation for its partners, the loan can now be increased to include partner compensation. In addition, seasonal businesses that calculated their loan values based on the original guidance by the SBA which was based on payroll from 2/15/19- 6/30/19 can now get an increase if their payroll from the revised allowable period from 5/1/2019- 9/15/2019 would yield a larger loan amount.
In either of these cases, if you want to amend your loan amount. You must reach out to your lender ASAP, so that they can file your adjustment with the SBA before their deadline of 5/22/2019.