PPP Loan Necessity Questionnaire for Loans Over $2 Million

On October 26, 2020, the SBA issued a notice in the federal register stating the SBA’s intent to release two new forms (Form 3509 for for-profit business and Form 3510 for not-for-profit entities) related to the Paycheck Protection Program (“PPP”).

Note: the proposed forms are drafts and may change during the thirty-day public comment period. Accordingly, the information below remains subject to change pending the release of final forms.

As currently written, Forms 3509 and 3510, “Paycheck Protection Loan Necessity Questionnaire” will be sent to borrowers with PPP loans over $2 million after they have applied for forgiveness. The form states that the information provided will be used to aid the SBA’s review of your good-faith certification that economic uncertainty made your loan request necessary to support ongoing operations.

The questionnaire is nine pages long and split into three sections; basic demographic information, a business activity assessment, and a liquidity assessment.

The business activity assessment requests information about the borrower’s gross revenues during the second quarters of 2019 and 2020 (or the third quarter if seasonal), how governmental orders impacted the borrower’s operations, if there were any voluntary closures or operational changes made by the borrower, and capital projects beginning after March 13, 2020.

The liquidity assessment requests metrics such as cash balances, distributions, debt repayments, owners and employees that are paid in excess of $250,000 annually, and the ownership of the borrower (i.e. publicly traded or private equity ownership).

Is there anything PPP Borrowers should do now?

The questionnaire will be sent to you from your bank if the SBA requests it.  The completed form is due to the lender servicing your PPP loan within ten business days of receipt from your lender.

Due to the quick turnaround, if your PPP loan is in excess of $2 million, it’s a good idea to review Form 3509 and prepare the documentation ahead of time.  In addition to the financial data requested, you should also have contemporaneous documentation (i.e. good faith memo, projections, emails, etc.) supporting your rationale behind needing the loan at the time of application.

If you have any questions regarding this or other aspects of your PPP loan, contact Samantha Brizgis at Kirsch CPA at 513.858.6040 to discuss.