WASHINGTON (Reuters) - The U.S. Treasury and Small Business Administration clarified Wednesday that businesses that seek less than $2 million in emergency relief under the Paycheck Protection Program (PPP) will be considered qualified unless proven otherwise.
The government agencies said the “safe harbor” should reassure smaller businesses they will not be penalized for taking on the loans. They added that the government would not pursue penalties for any companies that improperly received such loans if the companies pay the money back.
The guidance is aimed at reassuring smaller businesses considering the emergency relief that they will not end up facing a costly or complex audit or penalty for failing to meet some of the program’s terms.
Some larger companies have faced a backlash for seeking funds under the emergency loan program, which requires businesses to certify that economic uncertainty driven by the coronavirus pandemic may cause the business to go under without emergency assistance.
The new guidance adds that businesses seeking loans above $2 million may still qualify for the program, although those larger loans will be reviewed by the SBA for compliance.
However, the government also granted some leeway to larger companies, saying that firms that receive loans that end up not qualifying can simply pay the funds back. If so, the companies will not face “administrative enforcement or referrals to other agencies” by the SBA.
Reporting by Pete Schroeder; Editing by Bernadette Baum