The Treasury and SBA announced on April 28 that it intends to do a full review of applicant certifications for funded loans under the Paycheck Protection Program (PPP) in excess of $2 million.

How This Will Work

The announcement describes that for all loans made in excess of $2 million that such loans will be subject to a full review of the applicant’s certifications of need once the applicant’s lender has submitted the applicant’s forgiveness request. In comments to the press Tuesday (April 28) morning, Secretary Mnuchin stated that only after this review has been conducted will forgiveness be granted to those considered eligible.

Treasury and SBA also announced that guidance implementing this procedure will be forthcoming.

Practical Impact

For clients with loan requests in excess of $2 million, it is strongly recommended that they analyze their certification in light of the above as soon as possible and in any event by May 7, 2020, which is the end of the grace period for borrowers to return funds without penalty if certification requirements are not met. It would appear that Treasury intends to conduct the review through the SBA, so an additional practical consideration for such borrowers will be of potential significant delay in processing forgiveness requests.

This is consistent with prior observations that scrutiny is likely to increase over time and particularly as it relates to PPP loan forgiveness.

Please reach out to GHJ’s COVID-19 Resource Team if you have any questions specific to your businesses on the PPP loan, CARES Act or any other COVID-19-related legislation or issues.

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David Horwich

David Horwich has worked as an investment banker and advisor to both public and privately held businesses for over 30 years. David provides his clients with a focused, integrative and transparent approach. As leader of GHJ’s Growth Planning and Strategic Advisory Practice, David has advised clients…Learn More

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David Sutton

David Sutton has more than 15 years of experience across finance, restructuring, and mergers and acquisitions. David leads GHJ’s Private Equity practice, serving clients across the US and ranging from small family offices to established multi-disciplinary funds. David’s deal experience includes…Learn More