The Small Business Administration (SBA) has discontinued use of the Loan Necessity Questionnaires, which were required for Paycheck Protection Program (PPP) loans of $2 million or more. The SBA will no longer request Form 3509 for for-profit borrowers or Form 3510 for not-for-profit borrowers. Borrowers also do not need to submit previously requested questionnaires.
This is welcome news for PPP borrowers of more than $2 million, but it is important for them to know that they must continue to maintain all records related to their PPP loans for six years after the date the loan is forgiven or repaid in full.
The SBA introduced the Loan Necessity Questionnaire form in November 2020 to gather additional financial information to ensure that economic uncertainty from the COVID-19 pandemic made a PPP loan necessary. The questionnaire, however, requested information for the period after the PPP loan was certified and disbursed.
In December 2020, the Associated General Contractors of America (AGC) filed a lawsuit to challenge the legality of the questionnaire. The AGC argued that the SBA did not follow the proper administrative procedures in adopting the questionnaire and that the form changed the forgiveness requirements of the loans after the loans were issued.
In its letter to the Office of Management and Budget explaining its reasons for withdrawing the forms, the SBA stated that the questionnaire was no longer necessary given that the program expired on May 31, 2021. The SBA also cited public opposition to the questionnaires as “unnecessary and burdensome” and noted that loan necessity reviews have caused delays of longer than the 90-day statutory timeline for forgiveness.
For information about PPP loan forgiveness, contact us. We are here to help.