AICPA Pushes Back on PPP Loan Necessity Questionnaire Response backed by 80 National Organizations
November 23, 2020
We previously discussed the U.S. Small Business Administration’s (SBA) issuance of two loan necessity questionnaires, Form 3509 (used by for-profit entities) and Form 3510 (used by non-profit entities). This issuance was the first indication from the SBA as to how they might evaluate a business who borrowed $2 million or greater, together with their affiliates, “needed” their Paycheck Protection Program (PPP) loan. Upon applying for a PPP loan, all borrowers were required to certify that “[c]urrent economic uncertainty makes this loan necessary to support the ongoing operations.”
With the 30-day comment period on the loan necessity questionnaires set to end on November 25, the American Institute of Certified Public Accounts (AICPA) issued their response. On November 17, the AICPA submitted a letter to Congress with not only their feedback, but collectively the comments from 80 leading national organizations representing the vast majority of the millions of small business borrowers and thousands of lenders participating in the PPP.
The letter notes that “the questionnaires introduce a confusing and burdensome process for both borrowers and lenders, and we fear that it could lead the agencies to inappropriately question thousands of qualified PPP loans granted to struggling small businesses. On behalf of the millions of American workers supported by PPP loans, we urge you to act quickly to work directly with SBA and Treasury to avoid this unintended consequence.”
Referring to the loan necessity questionnaires, the AICPA further expressed their concern including, but not limited to the following:
- Disconnect between the loan necessity questionnaires and the good faith certification regarding economic uncertainty;
- Misplaced timing and reliance on data unrelated to program requirements; and
- Administrative and procedural burdens on borrowers and lenders.
Let Aprio Help
The loan necessity questionnaires provide a better understanding of what information we believe the SBA plans to use to evaluate economic uncertainty and need. However, the nature and extent the SBA will rely on this information is to be determined. Borrowers should review the questionnaires as part of their PPP loan risk assessment. We will continue to monitor the feedback during the 30-day comment period and track progress of the pending requirements.
Aprio has established a dedicated PPP loan forgiveness team that is continuously monitoring new guidance from the SBA, as well as the Treasury, Congress and the IRS, to ensure we have the latest information when advising our clients.
To discuss your documentation of economic uncertainty or how to interpret these pending requirements, contact Aprio’s dedicated PPP loan forgiveness team for a consultation.
About the Author
Justin Elanjian, CPA, is the Partner-in-Charge of Aprio’s Paycheck Protection Program (PPP) & Employee Retention Credit (ERC) Services. As a national PPP expert, prominent speaker and strategic business advisor, Justin helps both lenders and borrowers navigate the complexities of the PPP. He also helps his clients realize benefits from other stimulus package programs, such as the ERC, and is committed to strengthening his clients’ balance sheets and helping them achieve what’s next. Justin also leads a team of more than 50 professionals who share his passion for helping businesses maximize the federal COVID relief programs.