SBA Proposes Loan Necessity Questionnaire for PPP Borrowers with Loans of $2M or More

On October 26, 2020, the Small Business Administration (SBA) issued a notice in the Federal Register that, among other updates, announced two questionnaires, one for for-profit business borrowers and one for non-profit borrowers, that will go to Paycheck Protection Program (PPP) borrowers with loans totaling $2 million or more.

The SBA and the Treasury Department have been saying since early in the program that the government would be reviewing PPP loans in excess of $2 million and “other PPP loans as appropriate”. Part of that review may include the borrower’s good-faith certification that economic uncertainty at the time of application made the loan request necessary to support the ongoing operations of the applicant.

The loan necessity questionnaires can be found here:

Each form assesses the business activity and liquidity activity of borrowers.

If these forms are ultimately used by the government, the expectation will be for borrowers to complete these questionnaires in addition to the loan forgiveness applications. The questionnaires would be due to the lender within 10 days of receipt by the PPP borrower. Further criteria and content included within these questionnaires have not been made publicly available (as of the date of this correspondence), but once publicly available we look forward to providing more clarity in the process by which the SBA will review and assess PPP loans over $2 Million from a “loan necessity” perspective.

Each borrower has their own individual set of circumstances, and the answers are not always clear. If you have questions about your situation, please reach out to your KatzAbosch representative or contact us by clicking here.

To learn more about our PPP services please click here.

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