PPP Loan Necessity Questionnaire and More Documentation Requirements

December 4, 2020

For many borrowers of Paycheck Protection Program (PPP) loans, the loan necessity questionnaires – Form 3509 (used by for-profit entities) and  Form 3510 (used by nonprofit entities) – have caused concern pertaining to the defined “need” for a PPP loan. The questionnaires request information that borrowers were not privy to when certifying that “current economic conditions make the loan necessary to support ongoing operations.”  

We at Aprio, along with borrowers, lenders and other interested parties as evidenced in the AICPA’s letter, were hopeful that the comment period would provide the Small Business Administration (SBA) with sufficient cause for revising the questionnaires, but it appears we’ve come up short. 

The first business day after the comment period ended, we began hearing from multiple lenders that numerous requests for the originally proposed questionnaire were submitted by the SBA via their portal. This is disappointing to us, our clients and businesses who made their certification in good faith based on the relevant information at the time of application.

In addition to the completed loan necessity questionnaire, the SBA has also requested that borrowers provide “documents that each borrower must maintain but is not required to submit” as listed in the loan forgiveness application instructions. It appears the SBA is leveraging that this information includes “all records relating to the borrower’s PPP loan,” meaning more information is now required than was specifically outlined in the loan forgiveness application instructions.

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 while planning to apply for loan forgiveness. When considering eligibility, it’s important to keep in mind that the questionnaires, as overreaching as they may seem, may not only serve as a potential disqualifier, but also as a qualifier of need for the PPP loan.

Let Aprio Help 

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 the loan necessity questionnaires, documentation of economic uncertainty or other requirementscontact Aprio’s dedicated PPP loan forgiveness team for a consultation. 

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About the Author

Justin Elanjian

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.