On March 27, 2020, the US government passed the CARES Act in response to the COVID-19 crisis. Under the CARES Act, the Small Business Administration (SBA) is offering loans under the Paycheck Protection Program (PPP). On April 2, 2020, the SBA issued an interim final rule (Initial Rule) outlining the key provisions for implementing the PPP, including requiring each borrower to certify in the Borrower Application Form (SBA Form 2483) that “current economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant.” On May 24, 2020, the SBA issued an interim final rule with a limited safe harbor providing that any borrower that receives a PPP loan based on a misunderstanding or misapplication of the required certification standard and repays the loan in full by May 7, 2020, will be deemed by the SBA to have made the required certification in good faith.

On May 8, 2020, the SBA extended the limited safe harbor to May 14, 2020 and extended the deadline for PPP lenders to submit SBA Form 1502 for PPP loans that were approved before the availability of the updated SBA Form 1502 reporting process to May 22, 2020.

On May 20, 2020 the SBA issued another interim final rule (IFR) extending the limited safe harbor for the certification concerning the need for funds from the PPP from May 14, 2020 to May 18, 2020. In addition, because of the extension of the safe harbor deadline, the SBA extended the deadline for PPP lenders to submit SBA Form 1502 for PPP loans that were approved before the availability of the updated SBA Form 1502 reporting process to the later of May 29, 2020 and 10 calendar days after disbursement or cancellation of a PPP loan. This IFR is effective immediately. Public comment on the proposed rule must be received on or before June 25, 2020.

On April 24, 2020, the SBA posted an interim final rule relating to promissory notes, authorizations, affiliation, and eligibility in connection with the implementing the PPP (see Legal Update, CARES Act: SBA Issues Further Guidance on Promissory Notes, Authorizations, Affiliation, and Eligibility Under Paycheck Protection Program). This interim final rule also provided safe harbor relief to PPP borrowers who applied for and received PPP loans based on a misunderstanding or misapplication of the required certification standard. The safe harbor provided that any borrower that applied for a PPP loan, and repays the loan in full by May 7, 2020, will be deemed by SBA to have made the required certification in good faith.

On May 8, 2020, the SBA issued an internal final rule that extended this deadline to May 14, 2020 pending further guidance from the SBA on how they will review the required certification (see Legal Update, CARES Act: SBA Extends Limited Safe Harbor for Certification Concerning Need for PPP Loan Request). On May 13, 2020, the SBA issued the additional guidance which included an additional safe harbor providing that any PPP borrower, together with its affiliates, that received PPP loans with an original principal amount of less than $2 million will be deemed to have made the required certification concerning the necessity of the loan request in good faith (see Legal Update, CARES Act: SBA Provides Guidance on its Review of Borrowers' Certification Concerning Need for PPP Loan). Given the timing of this guidance, the SBA decided it was necessary to further extend the safe harbor deadline for repaying PPP loans to May 18, 2020.

The SBA determined that the extension of the safe harbor in the IFR requires a corresponding change in the date by which PPP lenders must submit SBA Form 1502 information for loans that were approved before the availability of the updated SBA Form 1502 reporting process. That date has been extended from May 18, 2020 to the later of:

There is no change to the requirements that:

The SBA determined that extensions in the IFR also require an identical corresponding date change to the guidance in the interim final rule on PPP loan increases that required lenders to submit SBA Form 1502 information for loans that were approved before the availability of the updated SBA Form 1502 reporting process by May 22, 2020 (see Legal Update, CARES Act: SBA Provides Guidance on Certain PPP Loan Increases and Eligibility of Electric Cooperatives). That date has been extended from May 22, 2020 to the later of:

For summaries of the SBA PPP, see:

For additional guidance from the Treasury Department, see: