The Paycheck Protection Program (PPP) loan application required borrowers to certify that “current economic uncertainty makes this loan request necessary to support the ongoing operations of the applicant.”
As previously reported by our Emergency Loan consultants, only borrowers of PPP loans greater than $2 million must document their ability to satisfy the loan necessity certification requirement.
Last week, the SBA proposed how PPP borrowers of more than $2 million would substantiate their need for PPP funds. It published proposed loan necessity forms for borrowers to complete to demonstrate economic need for this relief. Under the SBA’s plan, borrowers will receive these forms from their lenders, which will remit the completed forms to the SBA for review.
The new forms are:
- SBA Form 3509 – Loan Necessity Questionnaire (for For-Profit Borrowers)
- SBA Form 3510 – Loan Necessity Questionnaire (for Non-Profit Borrowers)
Under the proposal, once a borrower receives the form from their lender, they will have 10 days to return it with accompanying documentation. If necessary, the SBA may request additional information to complete their loan necessity evaluation. Failure to complete the form could result in a determination that the borrower was ineligible for the loan, loan amount or loan forgiveness.
More Guidance to Come
The SBA has not yet formally released the PPP loan necessity forms nor issued instructions on how borrowers are to complete these forms or how banks will administer distributing, collecting and remitting the forms to the SBA.
Once the SBA formally issues the loan necessity forms with instructions and guidance on documenting loan necessity, Grassi will issue detailed advice.