SBA to require PPP loan necessity form from large borrowers

By Jeff Drew

Businesses and not-for-profits that received $2 million or more in Paycheck Protection Program (PPP) loans must complete one of two new loan necessity questionnaires being sent to lenders by the U.S. Small Business Administration (SBA) for distribution to borrowers.

The new forms are designed to collect supplemental information SBA loan reviewers will use in evaluating the good-faith certification borrowers made on their PPP applications that economic uncertainty made their loan request necessary to support ongoing operations.

The forms are 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).

About 30,000 of the 5.2 million PPP loans were for $2 million or more, according to SBA reporting.

AICPA leaders addressed the new forms during a virtual town hall Thursday afternoon. Erik Asgeirsson, president and CEO of, the AICPA's business subsidiary, said AICPA leaders had met earlier in the day with lenders. Based on that conversation and on discussions this week with other stakeholders, the AICPA's understanding is that forms 3509 and 3510 will be available only through lenders and will not be published on the SBA site.

The SBA said in an email sent to lenders that they will be receiving notification letters requesting that borrowers complete the appropriate questionnaire. Upon receipt of the questionnaire from the lender servicing their PPP loan, borrowers are given 10 business days to return the completed form and required supporting documents to the lender. It's unclear whether there will be flexibility on the deadline.

Lenders are not required to verify or validate any of the borrower's responses or supporting documents on the loan necessity questionnaires, according to the SBA email.

The SBA is expected to release more guidance related to the forms 3509 and 3510, Asgeirsson said. The SBA did not immediately respond to an email seeking comment.

In previous guidance the SBA said that it would perform loan necessity reviews on all PPP loans to borrowers that, together with their affiliates, received $2 million or more in PPP funding. Instructions on the new forms warn borrowers that "failure to complete the form and provide the required supporting documents may result in SBA's determination that you were ineligible for either the PPP loan, the PPP loan amount, or any forgiveness amount claimed, and SBA may seek repayment of the loan or pursue other available remedies."

The for-profit and nonprofit forms each include 21 questions, many of which have multiple parts. The forms are nine pages each. Supporting documents are required for six questions.

Advice for CPAs

Lisa Simpson, CPA, CGMA, the AICPA's director of firm services, described the questionnaires during the AICPA town hall as seeking specific answers without asking for context or further explanation.

"They are very black and white," she said. However, Simpson also noted that it appears that the questionnaires will be only one component of the SBA's review and that borrowers will have the opportunity to provide further context once the initial questions have been reviewed.

AICPA leaders encouraged accountants to talk to their clients or employer about submitting contemporaneous records that explain the borrower's situation and thought process at the time the borrower applied for the PPP loan.

"We previously recommended that [borrowers] keep contemporaneous records of what a business was dealing with, anticipating, and deciding back at the time of the PPP loan," said Barry Melancon, CPA, CGMA, president and CEO of the Association of International Certified Professional Accountants. "Those records tell the uncertainty story," which is important to communicate alongside the responses required in the form.

Melancon said accountants have the opportunity to help businesses put the reasoning behind their PPP application into the context of the pandemic's early days, when the length and severity of business shutdowns were unknown.

"We all know it was much different than what we know today," he said. "I think that is important to be communicated."

The PPP in brief

Congress created the PPP as part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act, P.L. 116-136, which was signed into law March 27. The legislation authorized Treasury to use the SBA's 7(a) small business lending program to fund loans of up to $10 million per borrower that qualifying businesses could spend to cover payroll, mortgage interest, rent, and utilities.

PPP borrowers can qualify to have the loans forgiven if the proceeds are used to pay certain eligible costs.

The program stopped accepting applications on Aug. 8 with almost $134 billion of congressionally approved funds remaining unspent. Allowing certain small businesses to access those funds is among several PPP proposals that have been discussed between Congress and the White House, but nothing has been passed as no agreement has been achieved on a comprehensive COVID-19-related stimulus bill during a contentious election year.

AICPA experts discuss the latest on the PPP and other small business aid programs during a virtual town hall. The webcasts, which provide CPE credit, are free to AICPA members. Go to the AICPA Town Hall Series webpage for more information and to register.

The AICPA's Paycheck Protection Program Resources page houses resources and tools produced by the AICPA to help address the economic impact of the coronavirus.

For more news and reporting on the coronavirus and how CPAs can handle challenges related to the pandemic, visit the JofA's coronavirus resources page.

Jeff Drew ( is a JofA senior editor.

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