The Treasury Department and Small Business Administration (SBA) announced this week an extension of the safe-harbor period for returning Paycheck Protection Program (PPP) loans to May 14.
SBA had previously set a May 7 deadline for companies and 501(c)(3) nonprofit groups that received PPP loans in order to maintain payroll and other expenses during the COVID-19 crisis to certify that their loan was necessary.
The SBA intends to provide additional guidance before May 14 on how it will review loan applicants’ certifications. Congress and administration officials have been trying to address an outcry that, in the rush to disperse hundreds of billions of emergency spending, large companies have received loans through the PPP. Treasury Secretary Steven Mnuchin said last week that SBA oversight of the program would be tightened to ensure the loans are being directed as intended to businesses with fewer than 500 employees.
“For any loan over $2 million the SBA will be doing a full review of that loan before there is loan forgiveness, so we will make sure that what is the intent for taxpayers is fulfilled here,” Mnuchin said. Mnuchin added that overall, the program is an “overwhelming success” and that a million loans have gone to companies with fewer than 10 employees.