COVID Loan Resources: PPP, EIDL & Main Street Loans
NPMA has also added a new FAQ on our website in response to questions about the PPP guidance on which companies are asked to return already approved loans:
I’ve read in the news about some companies having to return PPP loans by May 7th if they have access to “other capital.” How do I know if I have to return my PPP loan?The Small Businesses Administration updated their FAQ on 4/29/20 (available here) to clarify eligibility in response to reports of large, publicly traded companies taking these PPP loans; the case of Shake Shack is perhaps the most publicized. Congressional intent was that these loans were for small businesses, not for major companies that are publicly traded with large reserves and access to capital markets. The SBA has clarified in their 4/29/20 FAQ Update that companies who are publicly traded and have access to capital markets are unlikely to qualify: “For example, it is unlikely that a public company with substantial market value and access to capital markets will be able to make the required certification in good faith, and such a company should be prepared to demonstrate to SBA, upon request, the basis for its certification. (SBA FAQ, pg 11) Since businesses of any size can have access to lines of credit through their lending institutions and the CARES Act specifically does not say that access to a line of credit is a disqualifier, small businesses who have access to credit through their lending institutions are still eligible to get and keep a PPP loan, but they do need to show that’s it’s important for their businesses to continue functioning: “borrowers still must certify in good faith that their PPP loan request is necessary. Specifically, before submitting a PPP application, all borrowers should review carefully the required certification that ‘[c]urrent economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant.” (SBA FAQ, pg 11). It is also important for all borrowers to maintain records as required by the PPP. Each individual company is best situated to make a determination of what the need is for their company.