Last month, Paycheck Protection Program (PPP) borrowers learned about Loan Necessity Questionnaires (SBA Form 3509 and SBA Form 3510) that were released from the SBA to lenders. SBA indicated that these forms would be provided to borrowers that, together with their affiliates, received loans of $2 million or more in an effort to evaluate their good-faith certification that current economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant”. Because no guidance was issued and the forms were initially not published with other PPP guidance on the SBA or Treasury websites, many borrowers raised questions about these forms and how they would be used by SBA.
While the SBA and Treasury have now posted these forms, they also released a new Frequently Asked Question (FAQ). In the answer, SBA confirms that a request to complete these forms does not indicate that the SBA is questioning the borrower’s certification of economic uncertainty or need for the loan.
SBA continues by explaining that “this certification is required to have been made in good faith at the time of the loan application, even if subsequent developments resulted in the loan no longer being necessary.” SBA may review the borrower’s “circumstances and actions both before and after the borrower’s certification to the extent that doing so will assist SBA in determining whether the borrower made the statutorily required certification in good faith at the time of its loan application.” SBA reserves the right to request additional support, which may allow borrowers to provide more detailed responses or narratives regarding their circumstances.
Borrowers expecting to receive these forms may consider the following actions:
- Review the available forms and prepare your responses.
- Consider additional narratives that may be important for the SBA to consider.
- If you receive the form from your lender, submit your response within 10 business days of receipt.
For questions regarding the PPP or Loan Necessity Questionnaires, please contact your HBK Advisor.