Insights

SBA Requires Completion of Loan Necessity Questionnaires
from PPP Borrowers with $2 Million or More


COVID-19 Business Update

Businesses and not-for-profits that received $2 million or more in Paycheck Protection Program (PPP) loans must complete one of two new loan necessity questionnaires being sent to lenders by the U.S. Small Business Administration (SBA) for distribution to borrowers.

The new forms are designed to collect supplemental information SBA loan reviewers will use in evaluating the good-faith certification borrowers made on their PPP applications that economic uncertainty made their loan request necessary to support ongoing operations.

The forms are SBA Form 3509, Paycheck Protection Program Loan Necessity Questionnaire (For-Profit Borrowers), (view PDF) and SBA Form 3510, Paycheck Protection Program Loan Necessity Questionnaire (Non-Profit Borrowers) (view PDF).  Forms 3509 and 3510 will be available only through lenders and will not be published on the SBA site.

About 30,000 of the 5.2 million PPP loans were for $2 million or more, according to SBA reporting.

The SBA said in an email sent to lenders that they will be receiving notification letters requesting that borrowers complete the appropriate questionnaire. Upon receipt of the questionnaire from the lender servicing their PPP loan, borrowers are given 10 business days to return the completed form and required supporting documents to the lender. It’s unclear whether there will be flexibility on the deadline.

Lenders are not required to verify or validate any of the borrower’s responses or supporting documents on the loan necessity questionnaires, according to the SBA email.

The SBA is expected to release more guidance related to the forms 3509 and 3510, Asgeirsson said.

In previous guidance the SBA said that it would perform loan necessity reviews on all PPP loans to borrowers that, together with their affiliates, received $2 million or more in PPP funding. Instructions on the new forms warn borrowers that “failure to complete the form and provide the required supporting documents may result in SBA’s determination that you were ineligible for either the PPP loan, the PPP loan amount, or any forgiveness amount claimed, and SBA may seek repayment of the loan or pursue other available remedies.”

The for-profit and nonprofit forms each include 21 questions, many of which have multiple parts. The forms are nine pages each. Supporting documents are required for six questions.

The information presented here should not be construed as legal, tax, accounting, or valuation advice. No one should act on such information without appropriate professional advice and after a thorough examination of the particular situation.