On May 22, 2020, a new interim final rule was posted by the Small Business Administration (SBA) that provides advice to borrowers and lenders concerning SBA’s review process under the Paycheck Protection Program (PPP). The review includes both calculation of loan forgiveness and eligibility. For example, the SBA may verify that the borrower’s business is a type that is eligible under SBA rules and to verify that the SBA affiliation rules have been properly applied.
Beyond forgiveness denial, the rule does not specifically indicate what other potential enforcement action might be taken against ineligible borrowers. Although the promise of guaranteed audits for original loans of $2 million or more remains, the SBA still can review all loans regardless of size.
The new rule advises that: