The SBA updated their FAQ on May 13.
Here's what we now know.
Guidance from the SBA on the Paycheck Protection Program has been updated frequently via the FAQ, and revisions to the document on May 13 provide us with much-needed clarity.
Prior guidance in the document raised doubt for some loan recipients. On top of potential public relations concerns of borrowing money that was later judged to not be needed, there was also talk of hefty fines and jail time.
However, if your loan was less than $2 million, FAQ 46 resolves that concern.
For loans that are under $2 million, loan recipients will be considered to have applied for the funding in good faith.
If your loan exceeded $2 million, even if you are later determined to have applied without economic necessity, you will have the opportunity to simply repay the loan, and the SBA will not refer the matter to any other government agency. The safe harbor deadline has been extended to May 18, 2020 (per FAQ #47). Note that all loans of $2 million or more will be audited. We strongly recommend that businesses document the conditions and planning that existed at the time the loan was applied for.
If you have questions, please refer to the latest version of the FAQ, and don't hesitate to reach out to a member of your Chortek team.