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  • Writer's pictureFair, Anderson Langerman


Updated: Aug 15, 2022

The SBA's retroactive guidance related to the "necessity" certification states that businesses must consider their access to other sources of liquidity prior to making the good faith certification.

Because this guidance from the SBA is vague, it does not allow us to advise our clients with certainty on this issue. So, what should you do? We recommend the following steps when making the decision to retain the PPP funds or return them by the "safe harbor" deadline of May 14, 2020. Document Your "Necessity" Rationale Considering the Following Three Factors: · Status of current business activity · Access to other sources of liquidity sufficient to support ongoing operations · Evaluation of whether other options, if any, could be implemented in a way that are not significantly detrimental to your business If you are audited by the SBA, it will likely be very important to establish that you considered each of these factors in good faith. The Treasury Secretary has stated that any borrower receiving more than $2 million in PPP funds will be subject to review by the SBA.

This new guidance is frustrating for business owners who are now faced with making a decision about the PPP funds without all the necessary information. We are watching this issue closely and are hopeful that specific guidance will be issued soon. We will continue to keep you informed as information becomes available.

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