The Paycheck Protection Program (PPP) is not the first massive and confusing government funding program initiated to mitigate a crisis. What better way to help understand the recent guidance and avoid the pitfalls of applying for loans under the (PPP) than hearing from three former federal prosecutors and a bank industry expert who saw it all in the 2008 Recession with TARP funding and other crisis aid?
The SBA’s guidance seems to have created as many questions as it has tried to answer. For example, what does “necessary” and “ability to access other sources of liquidity” really mean, and what is the significance of the newly announced “amnesty” period ending May 7? And, if the company accepts funds and misapplies this guidance, what could that mean for the company? The person certifying the application? Other executives? Board members? The lenders?
In light of recent statements by Congress, regulators, plaintiffs’ lawyers, and the press, there is little doubt there will be scrutiny that will accompany accepting federal funding.
As companies weigh their options and try to navigate this process, including the May 7 amnesty deadline, a panel of Goodwin partners offered observations on the guidance and the various risks presented by potential criminal and civil investigations, as well as related litigation, and how to minimize these risks.