On April 23, 2020, the Small Business Administration ("SBA") revised its PPP loan guidance with FAQ #31 that reminded borrowers to review carefully the required certification on the Borrower Application Form that “[c]urrent economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant.” SBA guidance and regulations provide that any borrower who applied for a PPP loan prior to April 24, 2020 and repays the loan in full by May 7, 2020 will be deemed by SBA to have made the required certification in good faith.
On May 5, 2020 this "safe harbor" repayment deadline was extended to May 14, 2020. The SBA has also indicated that it intends to provide additional guidance on how it will review the certification prior to May 14, 2020.
It is our recommendation that PPP loan recipients wait for this additional guidance before making a final decision as to whether or not to repay their loans prior to the new "safe harbor" deadline.
In a related matter, Zumasys Inc., a California software company who received a $750,000 PPP loan has filed a lawsuit against the SBA and U.S. Treasury Department. Their lawsuit seeks an order canceling the April 23 guidance and barring the government from enforcing it.