The SBA added another question and answer to its PPP Frequently Asked Questions this week, clarifying why the Loan Necessity Questionnaire forms are being circulated to Paycheck Protection Program (PPP) borrowers that received $2 million or more in PPP funds.
The answer explains that the SBA is using Forms 3509 and 3510 (for for-profit and not-for-profit borrowers, respectively) to evaluate the totality of a borrower’s circumstances and to identify where more information may be needed to confirm the borrower’s good faith certification that “economic uncertainty makes this loan request necessary to support the ongoing operations.”
The SBA assures borrowers that the questionnaire is not intended to challenge a borrower’s certification, but rather to:
- Assess the borrower’s circumstances through a multi-factor analysis
- Evaluate the borrower’s need at the time of loan application, even if later developments made the loan unnecessary
- Take into account the borrower’s circumstances and actions before and after the certification to determine “good faith” as statutorily required by the CARES Act
- Enable a targeted, multi-step approach for the SBA to ensure the integrity of the evaluation process, expedite processing and allocate finite resources to loans that require further review
What Should You Do Next?
When you receive this questionnaire, you will have 10 business days to complete and return it to your lender.
If you have not yet applied for loan forgiveness, we recommend you complete the questionnaire and put the forgiveness application on hold until the SBA process is more vetted.
If you have already applied for forgiveness and have not heard back from your lender, work closely with your advisor to complete the questionnaire and submit any subsequent narrative responses the SBA may request to complete their review.
It is worth noting that trade groups are actively pursuing lawsuits to stop the SBA from implementing the questionnaire requirement in its current form. Grassi’s Emergency Loan Consultants will keep you updated on any new developments.