SBA Announces Loan Necessity Questionnaires For PPP Loans Of $ 2 Million Or More | Partridge Snow & Hahn LLP

The Small Business Administration announced in the Federal Register the publication of two questionnaires proposed for recipients of Paycheck Protection Program (P3) loans of $ 2 million or more. One questionnaire will collect information from for-profit borrowers, and the other questionnaire is for non-profit organizations. Questionnaires have not been posted on the SBA website but are available here: SBA Form 3509 – For-profits and SBA Form 3510 – Non-profits

When applying for PPP loans, all applicants were required to certify in good faith that the current economic uncertainty made the loan application necessary to support the applicant’s ongoing operations. In May, the SBA issued guidelines stating that a borrower who received a PPP loan with an initial amount of less than $ 2 million will be deemed to have provided the required certification in good faith regarding the necessity of the loan application. That safe harbor, however, did not apply to borrowers with loans of $ 2 million or more, which the SBA said will be subject to a compliance review. The draft questionnaires are intended to solicit information for the SBA to verify this compliance.

The questionnaires request information and back-up documents regarding income, expenditure, operations, required closures and liquidity, among others. In their current form, the questionnaires indicate that they must be completed and returned to the PPP lender within ten business days of receipt by the borrower. The lender then has five working days to upload the form and documents to the PPP SBA forgiveness platform (forgiveness.sba.gov) and separately enter the answers to each question in the web form available on the platform.

Failure to complete the applicable form and provide the required supporting documents may result in the SBA determining that a borrower was not eligible for the PPP loan, the PPP loan amount or any rebate amount claimed, and the SBA may seek repayment of the loan or pursue other available remedies.

Considering the short timeframe for completing the forms, it would be prudent for PPP borrowers to start gathering the required responses and backup documents to facilitate a quick response once the questionnaires are finalized and officially released.

The SBA is seeking comments from interested parties on the draft questionnaires until November 25, 2020.

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