Upon what is the ultimate forgiveness of Black Bear Diner's PPP-SD loan conditioned?
Black_Bear_Diner Franchise · 2025 FDDAnswer from 2025 FDD Document
Under the terms of the Paycheck Protection Program, a PPP loan provides for conditional forgiveness if the Company utilizes the loan proceeds on admissible expenses, including qualifying payroll, rent, and utility expenses, and maintains employment and compensation levels for a specified period of time. Although the Company believes the conditions for full forgiveness of the PPP-SD loan have been met, ultimate forgiveness is conditioned upon the SBA concurring with the Company's good-faith assessment that the current economic uncertainty made the loan request necessary to support ongoing operations and the loan proceeds were used for admissible expenses. If the Company is later determined to have violated the provisions of the Paycheck Protection Program, the Company may be required to repay the PPP-SD loan in its entirety and/or be subject to additional penalties.
Source: Item 23 — RECEIPT (FDD pages 56–243)
What This Means (2025 FDD)
According to Black Bear Diner's 2025 Franchise Disclosure Document, the ultimate forgiveness of the PPP-SD loan is contingent upon the SBA agreeing with the Company's assessment. Specifically, the SBA must concur that the economic uncertainty at the time made the loan request necessary to support ongoing operations and that the loan proceeds were used for admissible expenses.
This means that even if Black Bear Diner believes it has met the initial conditions for forgiveness by using the loan for eligible expenses like payroll, rent, and utilities, and maintaining employment levels, the SBA's approval is still required. The SBA will review whether the initial loan request was justified based on the economic conditions at the time and whether the funds were used appropriately.
If the SBA determines that Black Bear Diner violated the provisions of the Paycheck Protection Program, the company may be required to repay the PPP-SD loan in its entirety and could also be subject to additional penalties. This highlights the importance of ensuring strict compliance with the PPP guidelines and maintaining thorough documentation of how the loan proceeds were used.