The U.S. Small Business Administration (SBA) has informed lenders that it is eliminating the loan necessity review for Paycheck Protection Program (PPP) loans of $2 million or greater.
In a notice sent July 9, the SBA said it would no longer request either version of the Loan Necessity Questionnaire: SBA Form 3509 for for-profit borrowers and SBA Form 3510 for not-for-profit borrowers. In addition, Loan Necessity Questionnaires previously requested by the SBA are no longer required to be submitted.
For PPP loans with an open request for additional information related to the Loan Necessity Questionnaire, the SBA advised lenders to close the request in the PPP computer platform and submit the loan back to the SBA.
The changes are effective immediately, but the SBA said it would release an FAQ shortly with more details.
The Associated General Contractors of America (AGC) said last month that the SBA was in the processing of dropping the Loan Necessity Questionnaire requirement.
The general contractors group filed a lawsuit December 2020 challenging the legality of the questionnaire and the process used by the SBA and the Office of Management and Budget (OMB) to develop, approve, and publish it. In a statement dated June 23, AGC’s CEO, Stephen E. Sandherr, said that it had learned the SBA had started the process to completely withdraw the questionnaire.
The SBA introduced the new forms in November. Later that month, the AICPA was among 80 organizations that signed a letter urging Congress, Treasury, and the SBA to temporarily suspend use of the questionnaires because of concerns about the types and time frames of information requested. The AICPA sent another letter the following week to the OMB and the SBA expressing concerns that Forms 3509 and 3510 were burdensome and not reflective of Congress’s intent when it established the PPP in March 2020.
The SBA stopped accepting applications for PPP loans on May 31. Over 14 months, the program provided around $800 billion in forgivable loans to nearly 12 million businesses. CPAs have played a key role in assisting borrowers through the application and forgiveness processes.
The loan necessity questionnaires were among many PPP forgiveness topics discussed July 8 during the AICPA’s Town Hall webcast. A replay of the webcast is available for free on AICPA TV.
AICPA experts discuss the latest on the PPP and other small business aid programs during a virtual town hall held every other week. The webcasts, which provide CPE credit, are free to AICPA members and $39 for nonmembers. Go to the AICPA Town Hall Series webpage for more information and to register. Recordings of Town Hall events are available to view for free on AICPA TV.
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 outbreak, visit the JofA’s coronavirus resources page or subscribe to our email alerts for breaking PPP news.
— Jeff Drew (Jeff.Drew@aicpa-cima.com) is a JofA senior editor.