SBA PPP: Loan Necessity Questionnaire
On October 26, 2020, the Small Business Administration (“SBA”) released a notice seeking approval from the Office of Management and Budget for certain information collection related to its Paycheck Protection Program (“PPP”). While the notice did not provide much detail, it mentioned the addition of two forms:
- Form 3509—Loan Necessity Questionnaire (For-Profit Borrowers)
- Form 3510—Loan Necessity Questionnaire (Non-Profit Borrowers)
The notice further estimated the combined number of respondents to be 52,000. The purpose of the Questionnaires is to assist the SBA in determining whether the Borrower’s certification that economic uncertainty made the loan request necessary to support ongoing operations was appropriate.
It is our understanding that, after a lender submits a borrower’s Application for Forgiveness to the SBA for review, the SBA may then make a request for additional information via the applicable Questionnaire. The Questionnaire makes clear that the SBA will require completion of the Questionnaire for any borrower that received a loan in excess of $2,000,000. The Questionnaire, along with supporting documentation, is due within 10 business days of receipt.
The Questionnaire includes, but is not limited to, questions relating to the following:
- Borrower’s gross receipts, and for nonprofits its contributions, in Q2 of 2020 and 2019
- Borrower’s expenses in Q2 of 2020 and 2019
- Whether the Borrower has been ordered to shut down by a state or local authority due to COVID-19
- Whether the Borrower has been ordered to significantly alter its operations by a state or local authority due to COVID-19
- Borrower’s approximate additional cash outlays for mandatory alterations and voluntary alterations
- Whether the Borrower voluntarily ceased or reduced its operations due to COVID-19
- Borrower’s cash, savings, and temporary cash investments prior to the PPP application
- Whether the Borrower prepaid any outstanding debt prior to the end of its Covered Period
- Whether any employee received compensation in excess of $250,000 on an annualized basis during its Covered Period
- Whether the Borrower received funds from any other CARES Act program
Finally, the Questionnaire includes another set of certifications, similar to those included on previous applications. While these Questionnaires are of primary interest to borrowers of loans in excess of $2,000,000, they may serve as a helpful to guide to any other borrower that has questions regarding loan necessity. If you have any questions regarding the SBA PPP loans, or other aspects of the CARES Act, please contact a Baird Holm LLP attorney.