Shearman & Sterling – On April 23, 2020 and April 28, 2020, the U.S. Small Business Administration (SBA) and the U.S. Department of the Treasury posted additional guidance on eligibility for the Paycheck Protection Program (PPP) by updating its Frequently Asked Questions (FAQs) release on the PPP. The FAQs, which were issued in response to reports regarding PPP loans received by certain companies, address the good-faith certification by the Applicant that the current “economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant” (see questions 31 and 37). While question 31 is addressed to “large companies with adequate sources of liquidity,” question 37 clarifies that the guidance contained in question 31 applies to “businesses owned by private companies with adequate sources of liquidity to support the business’s ongoing operations.” Thus, the guidance provided by question 31 should be considered by portfolio companies of private equity and venture capital firms.
