Q: “Would you recommend that we prepare a document or memo that substantiates the certifications we made in our PPP loan application?”
May 14, 2020
Answered by Eileen Sethna
Answer: Yes, we do. Coupled with the guidance issued in FAQ#46, we recommend that if you received a PPP loan over $2M, that you put together a summary of the bases for your certification.
- consider your top customers, are their respective industries struggling (like large retailers filing bankruptcies);
- are your receivables aging;
- have you been asked to extend payment terms;
- might any extension of payment terms compromise any potential borrowing base credit facilities you have;
- were your retail tenants sheltered in place and have no way to operate;
- what are the industry trends for your retail clients?
Work to create a narrative as to how and why “economic uncertainty” made your loan request necessary to support your ongoing operations. If and when you are audited, you have already prepared for potential certification scrutiny.