Update – SBA Adds Guidance Regarding Necessity Certification Under The Paycheck Protection Program

On April 23, 2020, the Small Business Administration ("SBA") issued additional guidance (in an update to its previously published FAQs, a current version of which can be found here) regarding whether businesses owned by large companies qualify for a Paycheck Protection Program ("PPP") loan under Section 1102 of the Coronavirus Aid, Relief, and Economic Security Act ("CARES Act").

Specifically, the SBA has indicated that in addition to reviewing other applicable eligibility requirements and rules, a borrower must assess their economic need for the PPP loan under the standard established by the CARES Act and the PPP regulations that existed at the time of loan application.

As part of the PPP loan application process, borrowers are required to make certain certifications, including certifying in good faith that "[c] urrent economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant. "