Many firms in the A/E industry have either received or are considering pursuing one of the Paycheck Protection Program (PPP) loans issued during this ongoing crisis.
The PPP loans and related loan forgiveness have been a hot topic in the press, as the funding for the first round of loans was quickly depleted. On April 23, the Small Business Administration (SBA) issued a new Frequently Asked Question (FAQ) #31 to further define its position with regard to necessity of the loan. The full text of the FAQ can be found at the SBA’s website.
The FAQ states:
“Although the CARES Act suspends the ordinary requirement that borrowers must be unable to obtain credit elsewhere (as defined in section 3(h) of the Small Business Act), borrowers still must certify in good faith that their PPP loan request is necessary. Specifically, before submitting a PPP application, all borrowers should review carefully the required certification that “[c]urrent economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant.” Borrowers must make this certification in good faith, taking 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.”
A lot of articles are being published that provide analysis and commentary on the FAQ. If your firm is considering a PPP loan or has already obtained one, I would suggest reading the FAQ and doing some additional research on this important topic.
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