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Coronavirus Aid, Relief, and Economic Security Act

Paycheck Protection Program

 

The current law closed the Paycheck Protection Program on Saturday, August 8. We are not accepting new PPP loan applications.


 
 
 
 
Business owners who apply to the United States Small Business Administration (“SBA”) for a Paycheck Protection Program (PPP) loan established under the federal Coronavirus Aid, Relief, and Economic Security Act (CARES Act) are required to make several good faith certifications, the first of which being a certification that:
 
Current economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant.
 
Business owners who apply for a PPP loan are also required to certify to the SBA that the information in their application and all supporting documents and forms is true and accurate. Federal law provides that business owners who knowingly making a false statement to a federally insured bank such as Rockland Trust Company to obtain a PPP loan are punishable by imprisonment of not more than thirty years and/or a fine of not more than $1,000,000.
 
On April 23, 2020 the SBA issued additional guidance that could have significant ramifications for business owners that have applied for, or are considering applying for, a PPP loan. The SBA guidance, provided in a Question and Answer format, states:

Question: Do businesses owned by large companies with adequate sources of liquidity to support the business’s ongoing operations qualify for a PPP loan?
 
Answer: In addition to reviewing applicable affiliation rules to determine eligibility, all borrowers must assess their economic need for a PPP loan under the standard established by the CARES Act and the PPP regulations at the time of the loan application. Although the CARES Act suspends the ordinary requirement that borrowers must be unable to obtain credit elsewhere (as defined in section 3(h) of the Small Business Act), borrowers still must certify in good faith that their PPP loan request is necessary. Specifically, before submitting a PPP application, all borrowers should review carefully the required certification that “[c]urrent economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant.” Borrowers must make this certification in good faith, taking into account their current business activity and their ability to access other sources of liquidity sufficient to support their ongoing operations in a manner that is not significantly detrimental to the business. For example, it is unlikely that a public company with substantial market value and access to capital markets will be able to make the required certification in good faith, and such a company should be prepared to demonstrate to SBA, upon request, the basis for its certification. 
 
Lenders may rely on a borrower’s certification regarding the necessity of the loan request. Any borrower that applied for a PPP loan prior to the issuance of this guidance and repays the loan in full by May 14, 2020 will be deemed by the SBA to have made the required certification in good faith.
 
On April 28, 2020 the SBA issued additional guidance that reemphasized this point by answering the question “Do businesses owned by private companies with adequate sources of liquidity to support the business’s ongoing operations qualify for a PPP loan?” by simply referring back to the answer quoted above. Government officials have also recently stated that all recipients of PPP loans $2 Million or larger in size will be audited, and that some smaller PPP loans will also be checked.
 
This SBA guidance may affect the potential risk of a PPP loan. Business owners that have already applied for or are considering applying for a PPP loan should before May 14th carefully reassess their financial condition and eligibility, consider whether alternative financing is available, seek accounting, legal, or other professional advice, and evaluate whether to obtain a PPP loan or to repay a PPP loan already received.
 
 
The SBA guidance regrading certification of the accuracy of information supplied to the SBA may result in business owners deciding to pay off their loan. Business owners that have already applied for or are considering applying for a PPP loan should before May 14th carefully reassess their financial condition and eligibility, consider whether alternative financing is available, seek accounting, legal, or other professional advice, and evaluate whether to obtain a PPP loan or to repay a PPP loan already received. Any borrower that repays the loan in full by May 14, 2020 will be deemed by the SBA to have made the required certification in good faith.
 
To pay off your Payroll Protection Loan, you should make your payment directly to Rockland Trust. Your payoff amount will include any unpaid principal, plus interest and fees. To obtain your current payoff amount, please call 508-946-8784. Please note, the fastest way to pay off your quoted loan balance is by making an electronic payment or wire transfer.
 
 
Unfortunately, in times of uncertainty, fraudsters often take advantage.  The Better Business Bureau is reporting that government imposters are calling about COVID-19 relief. As part of the scam, callers suggest that you might qualify for a special COVID-19 government grant and that it's necessary to first verify your identity and process your request.
 
If you receive a call like this or texts and emails claiming that you can get your money faster by sending personal information or clicking on links, please ignore them.