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SBA Issues Questionnaires to Large Paycheck Protection Program (PPP) Borrowers

The Small Business Administration (SBA) is seeking permission from the Office of Management and Budget (OMB) to collect information on loan necessity from borrowers who received loans from the Paycheck Protection Program (PPP) of $2 million or more.  The information will be used by SBA loan reviewers to evaluate the good-faith certification made by the borrowers on their loan application, that economic uncertainty made the loan request necessary to support the borrower’s ongoing operations. In the questionnaire, the SBA said it is reviewing the loans “to maximize program integrity and protect taxpayer resources.”  The agency said in the document the information “will be used to inform SBA’s review of your good-faith certification that economic uncertainty made your loan request necessary to support your ongoing operations.”

The SBA will request this information using two new forms:

  • SBA Form 3509 Loan Necessity Questionnaire (For-Profit Borrowers); and
  • SBA Form 3510 Loan Necessity Questionnaire (Non-Profit Borrowers).

The requested information has two main sections – for Business Activity Assessment and for Liquidity Assessment, and includes among other things:

  • Gross revenue (information for 2Q19 v. 2Q20)
  • Impact of COVID-19 on activities
  • Cash and cash equivalents and use of funds
  • Dividends or other capital distributions during the loan forgiveness covered period
  • Employee or Owners compensation in an amount that exceeds $250,000 on an annualized basis during the loan forgiveness covered period
  • Funds received, if any, from other CARES Act programs.

Questions have the option for responses to be identified as confidential or not.

The completed form will be due to the lender servicing the borrower’s PPP loan within 10 business days of receipt of the questionnaire from the lender.

Within five business days after the borrower provides a completed form with all required responses, supporting documents and signatures and certifications, the lender servicing the loan is required to upload the form and documents to the SBA PPP Forgiveness Platform.

Failure to complete the form and provide the required supporting documents may result in SBA’s determination that the borrower was ineligible for either the PPP loan, loan amount or any forgiveness amount claimed and SBA may seek repayment of the loan or pursue other available remedies.

The SBA published this notice in the Federal Register on October 26, 2020.  Comments regarding the proposed questionnaires and information request may be submitted to the SBA as specified in the Federal Register notice and must be received no later than November 25, 2020.  For additional information, see the Federal Register notice, here .

Prepared By:
David F. Gawley, CPA | Tax Manager

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