Daniel Suleiman and Amanda Kramer spoke with Law360 about the safe harbor deadline established by the Small Business Administration for companies that may have improperly taken out loans through the Paycheck Protection Program.
According to Mr. Suleiman, since SBA’s announcement that companies with substantial market value will not meet the required certification in good faith, many companies have had to re-evaluate not only whether they qualified for the program, but also whether they are willing to risk the costs of an audit or an investigation. He says, “An important question that companies are trying to deal with is, essentially, what does the changing guidance coming out of the SBA mean for them? The backdrop is, to what extent will they be investigated or audited over the basis for the certification that the economic uncertainty made their loan necessary?" He adds, “When you're actually investigated, that comes with a lot of costs and disruption and aggravation, frankly.”
Speaking on the investigations done by the SBA, he says, “I think we haven't seen the last of this situation. I think we're maybe going to see additional guidance or additional public reaction. We're going to see more Congressional activity, and to the extent that there's any sense that companies that didn't really need the funds took advantage of the program, we're going to see some consequences.”
According to Ms. Kramer, “business decisions could be difficult to evaluate years down the road.” She continues, “Keep a record of what the forecast was for [your] business: the day they applied for the loan, the week before that, and maybe the week before that.” What companies don't want, she said, is "going back and trying to recreate a situation that might not have actually played out in the manner they were forecasting it to on April 4. Now is the time to prepare."
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