Disaster Preparedness Finance Operations

Did you get a PPP loan? Here’s some news to note from the SBA

Small business owners who received a PPP loan of less than $2 million won’t likely face a federal audit. That’s according to new guidance released this week by the Small Business Administration and the US Treasury.

The Paycheck Protection Program, a forgivable loan program, allows small businesses hurt by the COVID-19 crisis to cover up to eight weeks of payroll and other expenses. A second helping of $310 billion was released on April 27, and small businesses are urged to apply through their banks. But as part of the application, businesses have to certify in good faith that they need the money because of the “current economic uncertainty.” That meant some businesses were concerned they could face an audit and penalties from the SBA if they weren’t able to adequately prove it.

But in updated guidance and a Q&A, the Treasury and the SBA said that because of “finite audit resources,” business owners who borrowed less than $2 million will be given “safe harbor.” That means they won’t face more scrutiny.


But businesses with a $2 million loan or larger could be further investigated. The Q&A says if those businesses aren’t able to prove what they certified to be true, the business will have to repay the loan balance and will be ineligible for loan forgiveness. They can also choose to return the loan proceeds. The Treasury and SBA are now giving them until May 18 to give the funds back.

Small businesses with smaller loans could still face scrutiny if they seek forgiveness of the loan. In any case, good record keeping is always critical.

In an advice column on Growbiz, Florida SBDC at FIU consultant Roberto Castellon recommended that business owners open a second account solely for their PPP funds. He also said clients who applied through smaller community banks were having more success with approvals. This week,  Florida SBDC at FIU , the small business development center within the university’s College of Business, announced it had helped small businesses in Miami-Dade and Monroe Counties secure $15.3 million in relief funding so far, including nearly $10 million in PPP funding.


In more good news, the PPP funds did not run out as quickly as they did in round one, so it is not too late to apply. Earlier this week, the SBA said the PPP lenders had distributed more than $191.3 billion, and the average loan size was about $72,296. That means about a third of the allotted capital is still out there to be committed.

In related news, the SBA  and Treasury Department on Friday released the application for business owners to fill out in order to have their PPP loans forgiven. The borrower is expected to complete the application and can submit it to their lender electronically. The lender will ultimately be responsible for assessing forgiveness.

There is much more for small businesses to know in the updated guidance, and the SBA says more guidance will be forthcoming about the forgiveness process.

Find the updated Q&A from the SBA here.

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