One of the more interesting provisions under the PPP Loans was that the forgiveness component would not be considered taxable income under Section 108 (which covers forgiveness of debt income). This in turn added to the attractiveness of the program by essentially making the forgiveness a tax-free grant from the government.

The CARES Act has been the largest economic relief program in the history of the United States, and as previously reported, there is potential to bring with it a high level of fraud or false representations, as we have previously discussed. Many borrowers analyzed the initial CARES Act and saw the opportunity for funding that could be beneficial to their business and followed the guidance in place at the time, which has since been updated several times.

The Treasury and SBA have issued a new directive under the FAQs that highlight and provide additional guidance related to eligibility and required certifications for these loans. As part of the initial application for the loan borrowers were required to certify, among...