The safe harbor provision of the Paycheck Protection Program (PPP), which was implemented under the Coronavirus Aid, Relief and Economic Security (CARES) Act, should be extended until the federal government issues final guidance, according to U.S. Rep. Bill Huizenga (R-MI).
The congressman led several colleagues in requesting that the U.S. Treasury Department and the U.S. Small Business Administration (SBA) extend the PPP provision until one week after final guidance is issued to “give businesses the opportunity to fully review the final guidance in order to determine whether or not to return the funds,” the lawmakers wrote in a May 13 letter sent to the heads of the Treasury Department and the SBA.
As part of the PPP loan application, there is a certification required that the “‘[c]urrent economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant,’” according to Rep. Huizenga’s letter.
“While the PPP interim rule did not define necessity, it is clear that Congress envisioned supporting companies that may not survive given their limited access to capital,” wrote Rep. Huizenga and his colleagues. “This does not mean that the business had to demonstrate likely foreclosure to qualify. Nor does the business need to demonstrate that it had no other means of obtaining credit.”
In its supplemental FAQs issued on April 23, SBA urged borrowers to carefully review the required certification regarding the necessity of the loan. SBA’s interim final rule gave borrowers a limited safe harbor window until May 7 to return funds that they should not have received. The window was extended until May 14 and SBA indicated it would deem the original certification as made in good faith if the funds were returned within that time frame, according to the lawmakers’ letter.
“As currently drafted, the interim final rule issued by the SBA has created some very vague guidance regarding the safe harbor provision,” according to their letter. “We ask that you exercise the power of your respective offices to extend the safe harbor window of opportunity for business certification until one week after the issuance of a final rule.”
Among the members who joined Rep. Huizenga in signing the letter were U.S. Reps. Steve Scalise (R-LA), Steve Stivers (R-OH), Glenn “GT” Thompson (R-PA), French Hill (R-AR), Tom Emmer (R-MN), Tom Cole (R-OK), and Troy Balderson (R-OH).