On April 23, 2020, the United States Treasury Department released guidance on the Paycheck Protection Program (PPP) regarding the “eligibility of large companies with adequate sources of liquidity to support the business’ ongoing operations” for a PPP loan. 

A PPP loan applicant must certify that the economic uncertainty makes the loan “necessary to support [its] ongoing operations.” The Treasury’s guidance reminds applicants that this certification must be made in good faith and warns of repercussions for applicants with “sources of liquidity sufficient to support their ongoing operations in a manner that is not significantly detrimental to the business.” 

Publicly traded companies that received loans were specifically called out as “unlikely” to have the requisite need for a loan and must “be prepared to demonstrate … the basis for [their] certification.”  Borrowers that are uncertain of their ability to show the requisite need are granted a grace period to return the loan by May 7, 2020 without further scrutiny.