May 19, 2020
Scott Cammarn comments on the Treasury Department’s new guidance on CARES Act loan forgiveness program auditing and potential punishment.
The latest guidance indicates that the SBA and Treasury Department are granting a presumption that for loans under $2 million, the application and level of necessity was submitted in good faith, says Scott Cammarn, co-chair of the financial services department at Cadwalader, Wickersham & Taft. However, in the same FAQ the Treasury Department adds that they may continue to audit loans below $2 million as appropriate, he adds.
“All PPP loans in excess of $2 million, and other PPP loans as appropriate, will be subject to review by SBA for compliance with program requirements,” the Treasury Department writes.
It is unclear what “other PPP loans” under $2 million will be subject to audit and what would happen if the SBA and Treasury find that these loans were not taken out of necessity, Cammarn says.