The Coronavirus Aid, Relief, and Economic Security Act (CARES Act) established the Paycheck Protection Program (PPP), under which certain businesses could apply for loans, a portion of which is eligible for forgiveness through the Small Business Administration.
As part of the application for the PPP funds, the borrower makes a good faith certification that the current economic uncertainty makes the loan request “necessary” to continue their ongoing operations. The borrower further acknowledges that the funds will be used to retain workers and maintain payroll, or to make mortgage payments, lease payments, and utility payments.
Chmelik Sitkin & Davis P.S. can assist clients in preparing for a potential audit arising from receipt of PPP funds. While an audit may not occur, or may occur at some point many months or years in the future, it is important to document why receipt of the PPP funds was necessary due to the economic uncertainty at the time the application was submitted. Preparing now, while recollection is fresh as to the necessity of these funds, could be invaluable in helping you navigate an audit.
If you need any assistance to help you through the operational legal issues your business may be facing, please contact Chmelik Sitkin & Davis P.S.’s Business Practice Group.