It appears that PPP Loan necessity questionnaires are no longer required to be submitted to SBA, as SBA is “eliminat[ing] the loan necessity review” for loans of $2M and up. We have not seen an official public statement from SBA, but I have confirmed with multiple contacts that SBA sent the email below email last Friday (July 2) to its lender network. Assuming it is accurate, which I believe it to be, this is great news for PPP borrowers, as well as their investors and potential acquirers.
In what is likely closely-related good news, we have received many reports over the past few weeks of SBA approving forgiveness on PPP loans of all sizes, including many loans above $2 million. We originally thought that this primarily due to SBA reallocating resources after formally closing the portals for both new PPP loans as of May 31 and for new RRF applications, as of June 30.
Again, this is great news for PPP borrowers … but it of course would not be the PPP program without a little final dose of confusion thrown in. The email below refers to “Loan Necessity Questionnaires (SBA Form 3510 and 3511)”.
· Form 3509 is the loan necessity questionnaire for for-profit borrowers.
· Form 3510 is the loan necessity questionnaire for non-profit borrowers.
· Form 3511 is the “affiliation worksheet” for borrowers.
From the context of the email, it seems clear (by PPP standards of clarity) that the above is likely just a typo and mistaken reference. Nothing in the email appears to distinguish between non-profit and for-profit borrowers, so I believe that the actual intent is to do exactly what the email says: “eliminate the loan necessity review” for all borrowers. That interpretation is also consistent with the limited information that has previously been available on this. The news seems to have been first mentioned in a June 23 tweet from the Associated General Contractors of America, which had filed suit against SBA to halt its use of the forms. AGC noted that in the course of settlement conversations with SBA, AGC “learned of SBA’s decision to completely withdraw the questionnaire.” The AICPA’sJournal of Accountancy reported that at least one SBA district office appeared to confirm this decision.
Despite what is hopefully just a typo, the email below seems to be further confirmation of this decision, subject of course to final rulemaking, which we will hopefully see soon. It remains to be seen what level of review, if any, SBA will undertake with respect to the necessity of PPP loans independent of whether these forms are required. Stay tuned, as we will provide an update if/when we see one on that.
Kudos to Brandy Sargent on our team for first picking up the scent that this was happening.