HCA Shares AGC Update on the SBA PPP Loan Guidance
Friday, May 1, 2020
Dear HCA Members:
There has been some important changes made to the U.S. Small Business Administration (SBA) Paycheck Protection Program (PPP) that you need to be aware of if you submitted a request for funding, and were approved. These changes require that the borrower prove that the loan request was made in good faith and that the loan was necessary to support the borrower’s ongoing operations. There is also concerns that the SBA will be looking to see if the borrower had other lines of credit or other assets available to them other than the PPP loans. Contractors who have received these funds need to take steps to document their need in order to protect themselves from the audits that are certain to follow.
Below is an article released by AGC Texas covering this topic, along with a very informative educational video provided by AGC America. Thank you to our friends at both of these associations for allowing HCA to share this information with our members. I urge any HCA member that was approved for the PPP loan to view the AGC Constructor Cast podcast on April 24 concerning updated PPP program guidance and what it means for construction firms linked below, and become familiar with the steps that you will need to protect your company.
Thank you and stay safe
Executive Vice President
Critical New SBA PPP Loan Guidance
On April 23, the U.S. Small Business Administration (SBA) and Department of the Treasury issued new guidance (see question #31) that puts Paycheck Protection Program (PPP) borrowers and potential borrowers on notice that they should be able to prove in “good faith” that “[c]urrent economic uncertainty makes this loan request necessary to support [their] ongoing operations” to be eligible for the loan.
This appears to be a warning to PPP borrowers of the possibility of federal audits and investigations to come. The guidance goes on to state that any “borrower that applied for a PPP loan prior to the issuance of this guidance and repays the loan in full by May 7, 2020, will be deemed by SBA to have made the required certification in good faith.”
While there is much ambiguity in this guidance, the message is clear that AGC members should have documentation of their market uncertainty and corresponding operational need for these PPP loans when they signed the loan application.
To help inform AGC Chapters and members about this development, we put together an AGC Constructor Cast podcast on April 24 concerning updated PPP program guidance and what it means for construction firms (which was included in an all member COVID-19 email update). You can watch it HERE and listen to it HERE.
AGC of America will provide additional information regarding this guidance as it becomes available.