US Treasury and Small Business Agency Give Smaller P3 Loan Flexibility
WASHINGTON (Reuters) – The U.S. Treasury and Small Business Administration said on Wednesday that companies requesting less than $ 2 million in emergency aid under the Paycheck Protection Program (PPP) will be considered qualified unless proven opposite.
Government agencies have said the “safe harbor” should reassure small businesses that they will not be penalized for taking out loans. They added that the government would not impose penalties on companies that received such loans inappropriately if the companies paid back the money.
The guidelines aim to reassure small businesses given emergency relief that they will not face an expensive or complex audit or penalty for failing to meet some of the conditions of the program.
Some large companies have faced a backlash to seek funds under the Emergency Lending Program, which requires companies to certify that economic uncertainty caused by the coronavirus pandemic can cause the company to go bankrupt without emergency help.
The new directive adds that businesses looking for loans over $ 2 million may still be eligible for the program, although those larger loans are reviewed by the SBA to ensure compliance.
However, the government has also given some leeway to large companies, saying that companies that receive loans that end up not qualifying can simply repay the funds. If this is the case, companies will not be faced with “administrative applications or referrals to other agencies” by the SBA.
Reporting by Pete Schroeder; Editing by Bernadette Baum