Will there be an audit of my business if I take the Paycheck Protection Program (PPP) loan?
Business owners are wondering if their companies will be audited if they take the Paycheck Protection Program (PPP) loan. The Treasury Secretary, Steven Mnuchin, said that the government will perform a full audit on any company taking out more than $2 million from the Small Business Administration (SBA) program loan.
The Paycheck Protection Loan (PPP) was intended to help small businesses with fewer than 500 employees. See more details on the PPP loan.
According to guidance posted by the SBA, borrowers would have to certify in good faith that their loan request was “necessary” for business operations.
Business owners are currently still awaiting further guidance from the Department of the Treasury and their full statement as to what a full audit will entail. Companies will likely need to gather support to demonstrate their basis for the certification that the loan amount was “necessary” to support their ongoing operations.
It is unclear at this time what factors the SBA will use to evaluate the certification. However, given the recent comments from the Secretary, access to capital outside of the SBA will likely be reviewed. Also, it would be beneficial for businesses to plan for the possibility of a protracted forgiveness process since the Secretary mentions that the audit will occur prior to the forgiveness of any loan amounts.
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