PPP Loans: The Good Faith Certification

May 07, 2020

To date, the Small Business Administration (SBA) and Treasury have issued a number of Interim Final Rules governing the Paycheck Protection Program (PPP). The SBA and Treasury have also published: a summary of the applicable affiliation rules; PPP fact sheets for borrowers and lenders; and responses to certain Frequently Asked Questions (FAQs), which have been updated several times.

On April 23, 2020 the SBA issued new guidance that makes it “unlikely” that big publicly traded companies can access the next round of PPP funding as they would not be able to meet the “good faith certification” requirement. The SBA indicated that large public companies who received a PPP loan before the rule change can avoid scrutiny by returning the relief loans by May 7, 2020 – this would serve as a safe harbor period for companies to return the PPP loan. If a borrower determines that it needs some, but not all, of the loan proceeds applied for and received (for example, if the business was not completely shut down and part of the workforce was retained), the guidelines from the SBA and the U.S. Treasury are as of now unclear as to whether the borrower should partially return the PPP Loan.

On April 28, 2020, after new revelations about big businesses getting money in the first wave, including the Los Angeles Lakers and Shake Shack, Treasury Secretary Steve Mnuchin stated that the SBA would undertake a “full review” of any loan that exceeds $2 million under the PPP, including with respect to the borrower’s analysis and certification of eligibility to participate in the PPP. It has been indicated that the SBA will conduct spot checks for smaller loans of under $2 million, although it is unclear as to what that will look like.

Recent developments have shown that the SBA wants borrowers to seriously consider their certification that the loan was “necessary” to support ongoing operations.

The SBA stated in FAQ 31 (published on April 23, 2020) and FAQ 37 (published April 28, 2020) that while the CARES Act waives the “credit elsewhere” requirement, borrowers, whether private or publicly-traded, must nonetheless carefully review and make in good faith the “necessity” certification that “current economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant”.

FAQ 31 introduced the first SBA guidance regarding “good faith certification,” which comprises three elements:

  1. An organization’s “current business activity”;
  2. An organization’s “ability to access other sources of liquidity sufficient to support… ongoing operations” (alternate sources of liquidity); and
  3. Access to alternate sources of liquidity “in a manner that is not significantly detrimental to the business” (significant detriment element).

However, the SBA has not provided direction on what constitutes “liquidity” or when the use of such liquidity would be “significantly detrimental.”

On May 5, 2020, the SBA published FAQ 43 acknowledging the uncertainties of the “good faith certification” and extended the repayment date for the safe harbor to May 14, 2020.  Borrowers do not need to apply for this extension.  The SBA intends to provide additional guidance on how it will review the certification prior to May 14, 2020.


New Funds Available for PPP and EIDL Loans: What You Need to Know

May 04, 2020

Note: This is an update to an article originally published on April 24, 2020.

On April 21, 2020, the U.S. Senate approved new funding for two Small Business Administration (SBA) programs that were implemented as part of the CARES Act to help support small businesses in response to the coronavirus pandemic: the Paycheck Protection Program (PPP) and Economic Injury Disaster Loans (EIDL). The U.S. House of Representatives approved the bill on April 23, 2020. The initial funding for the PPP and EIDL programs was exhausted on April 16, 2020.

Highlights of the New Bill

  • $310 billion of new funding for the SBA PPP loans
    • $60 billion set aside for smaller lending institutions, which serve minority and women owned businesses
  • $60 billion in additional SBA emergency EIDL relief
    • $50 billion for new EIDL loans
    • $10 billion for EIDL grants
    • Expands EIDL eligibility for grants and loans to include agricultural enterprises

Where to Apply?

We recommend that those business that did not receive PPP funds the first time around go through the entire list of SBA-approved lenders. Look at non-traditional, alternative sources (i.e. PayPal, Square, QuickBooks) who are now also participating in the PPP.

Can You Apply With More than One Lender?

Remember that you cannot get more than one PPP loan, but you are able to apply through different lenders. Considering the chaos of the initial round of the PPP along with the fact that different banks have different processes to address the demand of these loans, you might consider applying with multiple lenders. If you decide to apply with more than one lender, make sure to ask for a guarantee that the lenders will contact you before submitting your file. That way you can immediately withdraw your applications with the other lenders.

Can You Apply for Both PPP & Unemployment?

You cannot receive both a loan through the PPP and unemployment benefits. If you applied for unemployment while waiting for the second wave of PPP funds, you must withdraw from unemployment as soon as you receive your PPP funds.

Any New Statutory Changes/New SBA Rules?

The new bill did not introduce any changes to the statutory language in the CARES Act for the PPP. However, the SBA continues to provide new guidelines and rules to define the PPP.

On April 23, 2020 the SBA issued new guidance that makes it “unlikely” that big publicly traded companies can access the next round of PPP funding. The SBA indicated that large public companies who received a PPP loan before the rule change can avoid scrutiny by returning the relief loans in two weeks – this is a safe harbor period for those businesses to return the PPP loan. These returned loans will go back to the fund to be distributed to those business who need the funding.

Remember that borrowers applying for PPP loans must certify that these funds are necessary due to the current economic conditions. It is unlikely that public companies with substantial market value and access to capital markets will be able to make that good faith certification since they are able to tap into other sources of funding.

On April 28, 2020, after new revelations about big businesses getting money in the first wave, including the Los Angeles Lakers and Shake Shack, Treasury Secretary Steve Mnuchin stated that the SBA would undertake a “full review” of any loan that exceeds $2 million under the PPP.

Highlights from the New SBA Frequently Asked Questions (FAQs)

When does that eight-week period begin to determine the amount of forgiveness for a PPP Loan? 

The eight-week period begins on the date the lender makes the first disbursement of the PPP loan to the borrower. The lender must make the first disbursement of the loan no later than 10 calendar days from the date your PPP loan was approved.

How do the $10 million cap and affiliation rules work for franchises?

If a franchise brand is listed on the SBA Franchise Directory, each of its franchisees that meets the applicable size standard can apply for a PPP loan.  The $10 million cap on PPP loans is a limit per franchisee entity, and each franchisee is limited to one PPP loan.

What happens if you applied for a PPP loan based on the version of the PPP Interim Final Rule published on April 2, 2020?

You do not need to take any action based on the updated guidance in the new SBA FAQs dated April 23, 2020. Borrowers and lenders may rely on the laws, rules, and guidance available at the time of the relevant application.  However, borrowers whose previously-submitted loan applications have not yet been processed may revise their applications based on clarifications reflected in these FAQs.

The SBA added questions 32–35 on April 24, 2020 and question 36 on April 26, 2020 to the above-mentioned FAQs.

The new guidance:

  • States that the cost of a housing stipend or allowance provided to an employee as part of compensation counts toward payroll costs, subject to the $100,000 annual compensation per employee limitation.
  • Explains that borrowers and lenders may consider the principal residence rules in Regs. Sec. 1.121-1(b)(2) when determining whether or not an individual employee’s principal place of residence is in the United States.
  • States that agricultural producers, farmers, ranchers, and agricultural and other forms of cooperatives are eligible for a PPP loan if: (i) the business has 500 or fewer employees, (ii) the business fits within the revenue-based sized standard, which is average annual receipts of $1 million, or (iii) the business meets SBA’s “alternative size standard.”
  • States that all employees (individuals employed on a full-time, part-time, or other basis) should be used to determine eligibility under the 500-employee threshold established for the PPP.

How Do You Calculate the Maximum Amount of the PPP Loan?

On April 24, 2020, the SBA issued additional guidance on how each type of entity should go about calculating its maximum PPP loan amount. It includes guidance for the following businesses:

  • Self-employed individuals with no employees.
  • Self-employed individuals with employees.
  • Self-employed individuals who report income on IRS Form 1040, Schedule F, Profit or Loss From Farming.
  • S corporations and C corporations.
  • Eligible not-for-profit organizations.
  • Eligible not-for-profit religious institutions, veterans’ organizations, and tribal businesses.
  • LLC owners (whose instructions vary, depending on whether they file as a sole proprietor, partnership, or corporation).

The US Department of the Treasury (“Treasury”) issued additional guidance for seasonal employers. Treasury determined that seasonal employers are now allowed to use any consecutive 12-week period between May 1, 2019, and Sept. 15, 2019 as their base period for PPP loan calculations.[1]

Guidance from the IRS

On April 30th, the IRS issued a notice regarding tax treatment of PPP funds.  The IRS notice addresses the deductibility, for federal income tax purposes, of expenses paid by a business with PPP loans.  The IRS notice confirms expenses paid with PPP funds eventually forgiven are not deductible. As a reminder, the PPP loan forgiveness is not counted as taxable income. The new guidelines from the IRS are in place to prevent a “double tax benefit.”

[1] Initially, seasonal employers were allowed to use their monthly average payroll for the Feb. 15, 2019, to June 30, 2019, period or March 1, 2019, to June 30, 2019, period. However, upon further consideration, the Treasury determined that many seasonal employers have seasons that are later in the year.


COVID-19 CARES Act: Summary of PPP Lenders

Apr 07, 2020

Note: This article was originally published April 6, 2020 and has since been updated.

The Small Business Administration’s (“SBA“) Paycheck Protection Program (“PPP“) launched on Friday, April 3, 2020. Since the program launched on Friday, many U.S. banks are processing applications for 7(a) loans under the PPP only for existing clients. Some banks have already stopped taking PPP Loan Applications. Others are not ready to accept applications. Below is a summary of the current status of the PPP Loan applications for some of the largest financial institutions authorized by the SBA to issue 7(a) Loans. This list is not exhaustive. Information changes hourly; please follow the links below for updates from specific lenders.


Chase Bank is currently taking applications from existing Chase Business customers. Updates will be posted here.

What you need to know before applying for a PPP Loan with Chase

  • Borrowers must have an existing Chase Business checking account that’s been active since February 15, 2020.
  • The person applying must be authorized to borrow on behalf of the business.
  • The borrower cannot apply if the business already received a PPP Loan from Chase or applied for a PPP Loan from another financial institution.
  • The minimum PPP Loan amount is $1,000, and the maximum amount is determined based primarily on the borrower’s payroll-related costs, but cannot exceed $10 million.
    • This amount may be reduced based on loans to a borrower’s affiliated companies.
  • Borrowers should have available the outstanding balance of any existing Economic Injury Disaster Loans (EIDL).
  • Borrowers may request forgiveness of some or all of the principal balance of the loan.
    • Forgiveness is only available if borrowers use the funds for certain purposes as permitted by the SBA.
    • To request forgiveness, borrowers must provide documentation, and must certify, that the loan funds were used for SBA-qualifying purposes.
    • The borrower will be responsible for paying back any amounts not forgiven.

Wells Fargo

Updates will be posted here.

Wells Fargo is no longer taking PPP Loan applications. The bank states that it has received PPP Loan applications from customers, and it is expected that those applications will fill Wells Fargo’s capacity to lend under the program. Wells Fargo will review all applications submitted by customers via their online form through April 5 and provide updates in the coming days.

Bank of America

Bank of America is currently taking applications from existing Bank of America Business customers. Apply here.

What you need to know before applying for a PPP Loan with Bank of America

  • Borrowers must be Small Business clients with either:
    • a Small Business lending and Small Business checking relationship with Bank of America as of February 15, 2020; OR
    • a Small Business checking account opened no later than February 15, 2020 and no business credit or borrowing relationship with another bank.
  • A client’s pre-existing lending relationship with Bank of America may include small business, commercial or corporate credit cards, conventional business loan or lease, business lines of credit, business auto loans, practice solutions loans, trade and asset-based loans.
  • All PPP Loan applications, information and correspondence will occur online and through email, including the application process, submission of required documents, and follow up correspondence.
  • Borrowers must have a Business Online Banking account. If you are an existing client and do not currently have an online account, you must enroll in Business Online Banking as soon as possible.
  • After submitting a PPP Loan application with Bank of America, the Bank will contact you with next steps and to collect any required documents. Do not proactively deliver or send documents to Bank of America Financial Centers or banking teams.

Capital One

Capital One is currently testing its systems with a small number of PPP Loan applications. Updates will be posted here.

What you need to know before applying for a PPP Loan with Capital One

  • Borrowers must have a business banking relationship with Capital One as of February 15, 2020.
  • Capital One recommends that borrowers begin compiling the following information:
    • Date of business origination and business address
    • Business Employer Identification Number (EIN)
    • Payroll information detailing monthly costs for employees over the last 12 months, unless a borrower is a seasonal employer.

US Bank

Updates will be posted here.

US Bank is currently emailing invitations to apply to those who have completed the inquiry form, beginning with single-owner businesses (sole proprietorships, S-Corps, LLCs, and non-profits). The Bank expects to expand to all types of eligible businesses, independent contractors, multi-owner business and non-profits in the coming days.

US Bank will accept submissions from non-U.S. Bank customers. However, borrowers are encouraged to start with a bank where they already do business.

US Bank will not accept the U.S. Treasury’s application form. Applicants should fill out an inquiry form here.

Other SBA Section 7(a) Loan lenders

The Banks listed below are some of SBA’s most active SBA Section 7(a) Loan lenders. This is not an exhaustive list. The following updates are as of April 6, 2020.

  • 21st Century Bank – Currently processing PPP Loan applications for existing customers. Details here.
  • America First FCU – Apply by clicking Apply Now. Details here. Borrowers need to have a business account to apply. New clients may set up an account and apply.
  • Ameris Bank – Fill out an application here and submit to PPP@amerisbank.com. See more details. Accepting applications only from current Ameris Bank account holders.
  • Atlantic Capital Bank – Must be an existing client to apply for a PPP Loan. See more details here.
  • Bank of George – See more details and the documents a borrower will need to apply for the PPP Loan here.
  • Bank of Hope – No information on PPP Loan applications yet. Call 888-972-5363 for details. Updates here.
  • Bank of the West – PPP Loans only available to Bank of the West customers with a business checking account on or before February 15, 2020.
  • BankUnited – Only accepting PPP Loan applications from customers with deposit relationships only. See more details here.
  • BBVA Compass – BBVA Compass temporarily closed the PPP Loan application portal due to overwhelming response. The portal will reopen once BBVA Compass processes the applications it already received. See details here. You must use BBVA Online Banking and apply online.
  • Berkshire Bank – Berkshire Bank Small Business Customers should fill out a Contact Us form.
  • Byline Bank – See more detail here. If you’re a current customer, contact your Portfolio Manager.
  • Cadence Bank – PPP Loan applications will be available for existing business clients. Learn more here. Cadence Bank is finalizing its online loan application process.
  • Celtic Bank – Not accepting PPP Loan applications yet due to the SBA not yet releasing initial guidance. See more details here. You can start by filling out a form here.
  • Citizens Bank – Updates will be posted Existing customers can request an application here.
  • Comerica Bank – Existing customers will get first priority. See updates here.
  • Customers Bank – Complete the PPP Loan Application at the bottom of the webpage. Customers Bank notes that if you have an existing SBA loan, the SBA will cover the next six months of principal and interest starting April 2020 (for 7A and 504 loans.)
  • East West Bank – Fill out the application form here. Only existing customers’ PPP Loan applications are currently being accepted.
  • Fifth Third Bank – Existing Fifth Third customers can apply online. The Bank expects to begin servicing non-customers later in April. See more details here.
  • FirstBank – Download an application and see the list of required documentation here. Then email it along with the required documentation to your FirstBank banker.
  • First Commonwealth Bank – Complete an application here and include 2019 Form 941 or Form 944 and a beneficial ownership form. Upload the application on their DropBox site or mail the application.
  • First Financial Bank – Details will be posted here. First’s SBA clients who have accounts opened prior to April 1, 2020 may apply.
  • First Home Bank – Due to overwhelming response, First Home Bank suspended taking PPP Loan applications. See more details
  • First Horizon Bank – Expects to begin processing PPP Loan applications soon. Updates here.
  • First Western – To apply, please fill out the application form and submit it to First Western Bank & Trust and include other required documentation. Application form and updates can be found here.
  • Five Star Bank – Customers must have a Five Star Bank Business Checking Account. If you do not currently have an account, you must open a Five Star Bank Business Checking Account as soon as possible. See more details here.
  • Fountainhead SBF LLC – Expecting to take applications soon. Borrowers should have a completed application (SBA Form 2483) along with copies of their IRS Form 940, payroll reports or acceptable documentation that proves that they paid salary and payroll taxes on or around Feb. 15, 2020, and driver’s license of all 20% or more owners. For updates and PPP Loan application see here.
  • Frost Bank – Borrowers can apply with the SBA application here. Only for existing Frost business checking customers.
  • Fulton Bank – Existing Fulton Bank business customers can apply with the SBA application. See details here.
  • Hanmi Bank – Details here.
  • Harvest Small Business Finance, LLC – Not accepting applications at this moment. Updates here.
  • HomeTrust Bank – Due to high volume of applications, HomeTrust has suspended accepting any new applications at this time. Updates here.
  • Huntington National Bank – Name of the business applicant must match name of the Huntington Business Checking account in which the funds are being deposited. See updates here.
  • IncredibleBank – Currently processing PPP Loan applications for current customers, not accepting new applications at this time. See details here.
  • KeyBank National Association – Existing business clients can apply online. Updates will be posted here.
  • Live Oak Banking – Currently processing PPP Loan applications for existing loan customers and are unable to accept new applications at this time. Sign up here to see when the Bank is accepting applications.
  • M&T Bank – Currently accepting application from customers who have an M&T Business checking account (opened as of 2/15/2020). Updates may be posted here.
  • Metro City Bank – Borrowers can submit a PPP Loan application and send application documents to MCBPPPLoan@metrocitybank.bank. Not limited to existing clients.
  • Mountain Pacific Bank – Currently working on a checklist (for required documentation) and an application packet. Updates here.
  • Northwest Bank – Currently working on the application process. Updates here.
  • Old National Bank – Currently accepting applications for existing Old National clients only. Clients should have had an active account or loan with Old National prior to March 31, 2020. Contact a loan officer for details or call 1-800-731-2265. Details here.
  • Pacific City Bank – SBA loan page is here, no details for PPP Loan applications.
  • Pacific Western Bank – No details about the PPP Loan application. Contact your Pacific Western Bank Banker or Relationship Manager for more information. Learn more here.
  • Peapack-Gladstone Bank – See this update, borrowers should email PGBCovid19PPPRelief@pgbank.com for help.
  • Pinnacle Bank – Accepting applications. Details here.
  • PNC Bank – Must have an existing business deposit or lending relationship with PNC. Details here.
  • Readycap Lending, LLC – Submission form is now closed. Details here.
  • Regions Bank – Only accepts applications from Regions customers who established a banking relationship on or prior to March 1, 2020. Updates here.
  • Seacoast Commerce Bank – Seacoast Commerce Bank partnered with Kabbage to help expedite the processing and funding of your SBA PPP loan. Details here.
  • TD Bank – Customers should collect the materials outlined within the application to help expedite the application process. Details here.
  • The MINT National Bank – currently processing PPP Loan applications for its eligible customers. Details here.
  • Trustmark National Bank– Currently accepting online applications. Details here.
  • Umpqua Bank – Temporarily suspended accepting new applications. Details here.
  • Union Bank – Updates are posted here, but nothing specifically about PPP Loans.
  • United Community Bank – Temporarily suspended its application process, priority will be given to its current customers. Sign up here for updates on PPP.
  • Univest – Univest is currently accepting applications only from current Univest customers that are small businesses and sole proprietorships and will begin accepting applications on April 10, 2020 for current Univest customers that are independent contractors and self-employed individuals. Details here.
  • US Metro Bank – No updates about PPP Loans yet. Updates on SBA loans here.
  • VelocitySBA – Not accepting PPP Loan applications.
  • Wallis Bank – Due to extremely high demand for PPP Loans, Wallis Bank is only accepting applications from Texas, Southern California and the Atlanta Metro area at this time. Details here.
  • Zions Bank – Expecting to launch online applications soon. Details here.