Last week, the Small Business Administration began circulating “loan necessity” questionnaires aimed at borrowers that took forgivable Paycheck Protection Program loans worth $2 million or more.
The questionnaires are designed to help the SBA evaluate a borrower’s good-faith certification that its loan request was necessary to support ongoing operations. Borrowers that receive the questionnaire from their lenders are asked to return the questionnaire within 10 business days. If a borrower fails to complete the questionnaire, or if the SBA determines that the borrower did not have a good faith basis to certify that its loan request was necessary to support its ongoing operations, then the borrower’s PPP loan forgiveness application may be denied.
Some banks have lamented the questionnaires, concerned that the program’s shifting rules and expectations since its hurried launch in April could create complications for businesses that took advantage of the aid, according to an article in Politico.
The new questions for businesses in the nine-page questionnaire ask for details on quarterly revenue, capital expenditures, dividend payments and whether any employees earned more than $250,000.
As has been the case previously with the PPP, some tax advisers are recommending that lenders take a more prudent “wait-and-see attitude” when it comes to the completion of this questionnaire, although ultimately the borrower will need to make the call. Many believe more guidance will come from the SBA.
“Upon release of the final questionnaire, we suggest that borrowers review the questions asked, discuss them with your banker and gather documentation and support of the thought process used when applying for the loan, based on the facts and circumstances that existed at that time,” said Dawn Minotas, director of outsourced managed services at Marcum.
