The U.S. Small Business Administration (SBA) will require Paycheck Protection Program (PPP) lenders to issue “loan necessity” questionnaires to all borrowers of PPP loans of $2 million of more through, among other forms, SBA Form 3509 (Loan Necessity Questionnaire – For-Profit Borrowers) and SBA Form 3510 (Loan Necessity Questionnaire – Non-Profit Borrowers).

The questionnaires will be required from borrowers (for-profit and non-profit) that received PPP loans of $2million of more (in aggregate).

Per the Journal of Accountancy, 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.

For-profit borrowers will be required to complete a “Business Activity Assessment” with details on various historical and current financial metrics,  information on how various shutdown orders specifically impacted their business, and information about capital improvements.  Additionally, a “Liquidity Assessment” requests information and documentation related to assets, liabilities and equity.

Non-profit borrowers will be required to complete a  “Non-Profit Activity Assessment” and a “Liquidity Assessment” with similar requests for information and documentation as required for for-profit borrowers.

The AICPA and other organizations have signed onto a pair of letters expressing concerns about the new Paycheck Protection Program Loan Necessity Questionnaires to recommend the suspension of the questionnaires while working towards a better solution.  The letters can be read in full HERE.

We are in this together,

Brinker Simpson & Company, LLC

Disclaimer: This alert is for informational purposes only and does not constitute professional advice. Information contained in this communication is not intended or written to be used as tax advice & cannot be used by the recipient to avoid penalties that may be imposed under the Internal Revenue Code. We strongly advise you to seek professional assistance with respect to your specific issue(s).