PPP – Certifying a Good Faith Need
Many business owners are facing a difficult decision over whether to return PPP funds after recent guidance from the Treasury.
All borrowers must certify in good faith that their loan request is necessary. Specifically, applicants must certify that “economic uncertainty makes this loan request necessary to support the ongoing operations.” However, such a vague statement offers business owners little guidance.
Recent Treasury guidance now states that borrowers must take “into account their current business activity and their ability to access other sources of liquidity sufficient to support their ongoing operations in a manner that is not significantly detrimental to the business.” The treasury has gone on to state that most public companies, and even some larger private entities, likely cannot make a good faith certification of need, due to their overall liquidity. Moreover, the Treasury has stated that companies who repay PPP funds in full by May 14 will be deemed to have made a good faith certification.
This grace period only muddies the waters for business owners struggling to make difficult financial decisions in these times. Given the government’s emphasis on combatting COVID-19 related fraud, business owners should be carful in ensuring PPP compliance.
If you are struggling with PPP or other CARES Act compliance issues, contact the attorneys at Miller Law Group today for a free consultation.
Additional Resources:
Federal Prosecutors Bring First Criminal Charges for CARES Act Fraud
