U.S. Small Business Administration (SBA) may be in the process of removing the requirement that Paycheck Protection Program (PPP) borrowers submit a Loan Necessity Questionnaire when applying for forgiveness on loans of $2 million or more.
This follows negotiations attempting to settle a December 2020 lawsuit by The Associated General Contractors of America (AGC) challenging the legality of the questionnaire and the process used by the SBA and the Office of Management and Budget (OMB) to develop, approve, and publish it, according to The Journal of Accountancy.
The loan necessity questionnaire comes in two versions: SBA Form 3509, Paycheck Protection Program Loan Necessity Questionnaire (For-Profit Borrowers), and SBA Form 3510, Paycheck Protection Program Loan Necessity Questionnaire (Non-Profit Borrowers).
What Is In the PPP Loan Necessity Questionnaire?
In November 2020, the SBA created a PPP Loan Questionnaire in order to consistently review the PPP borrower’s good-faith certifications of the borrower’s economic need. The questionnaire applies to PPP loans greater than $2 million.
The requirement is backward-looking from the end of your covered period in an attempt to evaluate loan necessity. This questionnaire includes questions related to:
- Compensation in excess of $250,000
- Cash reserves prior to taking a PPP loan
- Distributions paid during the covered period
- Capital expenditures during the covered period
What To Do Next?
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