An Important Update on Returning PPP Loan Funds

Please note that this blog is based on laws effective on May 13, 2020 and may not contain later amendments. Please contact Cray Kaiser for most recent information.

We recently addressed the question, “do I need to consider returning my PPP loan funds?”. The SBA had provided guidance that if any borrower returns their funds by May 14, the borrower will have been deemed to make their PPP loan certification in good faith. However, today on May 13, the SBA has issued additional guidance regarding the good faith certification, which we’ve outlined below:

For borrowers of less than $2 million:

“SBA, in consultation with the Department of the Treasury, has determined that the following safe harbor will apply to SBA’s review of PPP loans with respect to this issue: Any borrower that, together with its affiliates, received PPP loans with an original principal amount of less than $2 million will be deemed to have made the required certification concerning the necessity of the loan request in good faith. “

What does this mean? If the borrower and its affiliates have borrowed less than $2 million in the PPP loan program, the safe harbor allows for them to automatically show the need for the PPP loans, regardless of other sources of liquidity.

For borrowers of more than $2 million:

“Importantly, borrowers with loans greater than $2 million that do not satisfy this safe harbor may still have an adequate basis for making the required good-faith certification, based on their individual circumstances in light of the language of the certification and SBA guidance. SBA has previously stated that all PPP loans in excess of $2 million, and other PPP loans as appropriate, will be subject to review by SBA for compliance with program requirements set forth in the PPP Interim Final Rules and in the Borrower Application Form. If SBA determines in the course of its review that a borrower lacked an adequate basis for the required certification concerning the necessity of the loan request, SBA will seek repayment of the outstanding PPP loan balance and will inform the lender that the borrower is not eligible for loan forgiveness. If the borrower repays the loan after receiving notification from SBA, SBA will not pursue administrative enforcement or referrals to other agencies based on its determination with respect to the certification concerning necessity of the loan request. SBA’s determination concerning the certification regarding the necessity of the loan request will not affect SBA’s loan guarantee.”

What does this mean? Our reading of the above is that borrowers of more than $2 million will still need to show the need for the PPP funds, lest the PPP loan needs to be repaid. Interpreting the phrase “SBA will not pursue administrative enforcement” will be important – this may mean that the threat of penalties has been lifted. Until we receive more clarifications from the SBA this is only an interpretation.

As always, we will continue to keep you abreast of these rapid developments. In the meantime, please contact Cray Kaiser if you have any questions.


These are certainly trying times and we want to reiterate that Cray Kaiser is here for you. As things continue to evolve in light of the COVID-19 pandemic, we at CK are taking additional precautions for the benefit of our team members and our clients.

Effective immediately:

  • No clients or guests will be allowed in our suite.
  • All in-person meetings are cancelled. Instead, we will be utilizing phone calls and/or email to communicate with our clients.
  • Our team members are being encouraged to work remotely. All staff are equipped with the appropriate technology and resources to continue to securely and confidentially serve you from home.
  • We will no longer have in-person drop offs of accounting/tax data. Instead, please drop off any packages outside the office door of our suite in the box provided.
  • All paper files, tax returns etc. will no longer be mailed by our office to you. We will be holding these items in our office to send to you at a later date.


We want to remind our clients of our portal access and your ability to safely and securely share your information with our team. We ask that you email to request your portal access. This will eliminate the need for you to drop off your tax information at our office.


Thank you for your patience and understanding during this challenging time. We wish you, your family, and your business health and safety. We will continue to support you as best as we can while keeping each other’s health a priority. If any changes occur during the course of the next few days, we will update our website.

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