The SBA is now offering one more extension of time to repay a loan under the safe harbor that was originally set at May 7 in third iteration of the PPP loan FAQ issued on May 13.[1] Now the SBA has delayed the date for repayment to avoid a question regarding the certification of the need for the loan to May 18th. Of interest, though, is that this has been issued on the same day the SBA issued guidance that provided the question would not be asked on loans of less than $2 million, as well as providing a later safe harbor for repaying the loan if the SBA determines there was no need for the loan.

The one major reason left to repay the loan would be to obtain the right to claim the employee retention credit in the future, assuming the IRS will move the date to repay the loan and regain the right to claim the credit to May 18.

The new Q&A reads:

47. Question: An SBA interim final rule posted on May 8, 2020 provided that any borrower who applied for a PPP loan and repays the loan in full by May 14, 2020 will be deemed by SBA to have made the required certification concerning the necessity of the loan request in good faith. Is it possible for a borrower to obtain an extension of the May 14, 2020 repayment date?

Answer: Yes, SBA is extending the repayment date for this safe harbor to May 18, 2020, to give borrowers an opportunity to review and consider FAQ #46. Borrowers do not need to apply for this extension. This extension will be promptly implemented through a revision to the SBA’s interim final rule providing the safe harbor.

[1] “Paycheck Protection Program Loans Frequently Asked Questions (FAQs),” Small Business Administration, May 13, 2020 3rd version, https://home.treasury.gov/system/files/136/Paycheck-Protection-Program-Frequently-Asked-Questions.pdf (retrieved May 13, 2020)