ST. LOUIS — Another $320 billion in Paycheck Protection Program funding is available, beginning today, and if the first round is any indication, the money will dry up quickly.
There's good reason for the high demand: the PPP loans — intended to help small businesses cover payroll or other critical expenses — can be forgiven if recipients meet certain terms, including keeping employees on payroll for 8 weeks.
But enrollment in the program can also carry longterm consequences, according to Steven Poindexter, an attorney at the Lewis Rice law firm in downtown St. Louis.
Though the PPP loans can be forgiven, the law contains enforcement provisions, primarily lawsuits under the False Claims Act, meant to punish firms that received the money when they didn't need it.
"The danger of that is if (a claim) is made, the business could be exposed to treble damages," or triple what was awarded by the federal government, said Poindexter.
The SBA on Thursday updated guidance for the program, adding that borrowers should carefully review a mandatory certification that "current economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant." It also added that 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."
The agency also said businesses that previously applied for a PPP loan can repay the money by May 7 and "be deemed by SBA to have made the required certification in good faith."
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