by Ron Holmes
In making a PPP application, the applicant certifies that the applicant in good faith believes there is an economic necessity for the funds. There have not been any definitive guidelines on what constitutes “economic necessity.” As we had hoped (expected would be too strong a word), the SBA has now provided guidance.
If the loan was less than $2,000,000…
The SBA released on May 13, 2020 an updated version of its answers to Frequently Asked Questions. Included as Question Number 46: “How will SBA review borrowers required good faith certification concerning the necessity of their loan request?” In response, the SBA has provided a safe harbor for any PPP loan with an original principal amount of less than $2,000,000. If your original PPP loan amount was less than $2,000,000, then you will be deemed to have made the required certification concerning the necessity loan request in good faith.
This is indeed good news for small businesses.
If the loan was more than $2,000,000…
If your original PPP loan amount was $2,000,000 or more, you may be put to the task of demonstrating an adequate basis for making the required good faith certification based upon your particular facts and circumstances. Either way, you are encouraged to dot your I’s and cross your T’s by keeping good records of your economic necessity and how you expended your PPP funds in order to gain the debt forgiveness (without tax consequences) that you no doubt seek.
If you have any questions, please contact Ron at (469) 916-7700 ext. 105.
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About Ron Holmes
His real estate law practice is as broad as it is deep. Mr. Holmes has served as lead counsel on real transactions all across the United States (more than twenty States), representing public and private companies, both domestic and international, in all manner of real estate transactions, including large scale multi-use land developments and high rise residential condominiums, to acquisitions and sales of operating property portfolios, office, industrial and retail leasing and virtually every other form of real estate development, construction, financing, investing and leasing.Learn more about Ron…