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Business owners who received money from the Small Business Administration’s Paycheck Protection Program have until Thursday to return the cash if they believe they don’t qualify for the loan’s terms and conditions.
The so-called safe harbor period, which ends Thursday, was intended to allow businesses that received money to ensure they meet the qualifications.
Since the program was rolled out so quickly in response to the coronavirus pandemic there has been some confusion and numerous changes made to different policies, which may have changed the eligibility of some applicants.
As previously reported by FOX Business, many business owners who applied for the loans with the right intentions are panicking over whether they will inadvertently find themselves in violation of the program’s updated terms.
In guidance issued in late April, for example, the agency said borrowers needed to assess their need for the loan – certifying in “good faith” that the cash is a necessity to support ongoing operations. The agency said business owners need to take into account both their current business activity and their ability to access other sources of liquidity to support operations.
On Wednesday, the government clarified that it will deem any business receiving less than $2 million to meet that good faith certification on the assumption that, unlike larger businesses, it likely has less access to other sources of liquidity given the current economic circumstances.
Any company that returns the cash in full by Thursday will have been determined to have made the required certification in good faith.
Meanwhile, the SBA said it plans to review all loans granted that are in excess of $2 million, as well as others “as appropriate.”
On Wednesday the government also said that a company found to be ineligible for a loan it received following an SBA review will have the opportunity to return the cash after being notified. If those conditions are met, it will not pursue administrative enforcement.
This could help to ease some concerns after the first PPP loan fraud charges were filed against two New England men earlier this month – and after Treasury Secretary Steven Mnuchin told FOX Business last week that anyone who took the money who shouldn’t have may be held criminally liable.
Some larger companies have already committed to returning the funds after receiving criticism for having applied for the loans in the first place – including Shake Shack, Ruth’s Chris and AutoZone.